Mastercard to invest about ₹733 cr in Airtel Africa unit
NEW DELHI: Airtel Africa on Thursday announced that Mastercard would invest $100 million (about ₹733 crore) in its wholly-owned subsidiary Airtel Mobile Commerce BV (AMC BV).
Mastercard would hold a minority stake in AMC BV on completion of the deal, with Airtel Africa continuing to hold the majority stake, an Airtel statement said.
Sources privy to the development said Mastercard would get about 3.75% stake in the firm.
AMC BV is currently the holding company for several of Airtel Africa’s mobile money operations and is intended to own and operate the mobile money businesses across all of Airtel Africa’s 14 operating countries. The proceeds from the transaction would be used to reduce Group debt and invest in network and sales infrastructure in the respective operating countries.
“Airtel Africa, a leading provider of telecommunications and mobile money services, with a presence in 14 countries across Africa, announces the signing of an agreement under which Mastercard, a leading innovator and global technology company in the payments industry, will invest $100 million in Airtel Mobile Commerce BV...,” the statement said.
The latest deal values Airtel Africa’s mobile money business at $2.65 billion on a cash and debt-free basis.
Mastercard - via one of its wholly-owned subsidiaries - will make the investment through a secondary purchase of shares in AMC BV from Airtel Africa. The transaction would close in two stages — $75 million to be invested at the first close, once the transfer of sufficient mobile money operations and contracts into AMC BV has been completed, while $25 million will be invested at the second close on further transfers.
Commenting on the development, Raghunath Mandava, Chief Executive Officer of Airtel Africa, said: “With today’s announcement we are pleased to welcome Mastercard as an investor in our mobile money business, joining The Rise Fund which we announced two weeks ago. This is a continuation of our strategy to increase the minority shareholding in our mobile money business with the further intention to list this business within four years.”
“We are significantly strengthening our existing strategic relationship with Mastercard to help us both realise the full potential from the substantial opportunity to improve financial inclusion across our countries of operation,” he added. The combination of the company’s strong customer base and distribution platforms and Mastercard’s products and services, innovation and knowhow, would drive demand and growth in financial services for the benefit of customers and markets, Mandava noted.