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Airtel Africa receives 100m US$ investment from Mastercard

AIRTEL Africa, a telco and mobile money services, has received 100 million US dollars for investment form Mastercard.

The telco, operating in 14 countries across Africa, said in release on Thursday that the fund will be invested in Airtel Mobile Commerce BV (AMC BV), a wholly owned subsidiary of Airtel Africa.

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 fourteen operating countries. Under the agreement signed between the two, Mastercard will hold a minority stake in AMC BV upon completion of the transaction, with Airtel Africa continuing to hold the majority stake.

“The Transaction is subject to customary closing conditions including necessary regulatory filings and approvals, and the transfer of specified mobile money business assets and contracts into AMC BV,” the statement said.

The transaction will close in two stages—75 million US dollars will be invested at first close, once the transfer of sufficient mobile money operations and contracts into AMC BV has been completed— while the remaining 25milion US dollars will be invested at second close upon further transfers.

Airtel Africa CEO Raghunath Mandava, said they welcomed Mastercard as an investor in their mobile money business, which was a continuation of their strategy to increase the minority shareholding in mobile money business.

“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,” Mr Mandava said.

The transaction values Airtel Africa’s mobile money business at 2.65billion US dollars on a cash and debt free basis. Alongside the investment, the Airtel and Mastercard have extended commercial agreements and signed a new commercial framework which will deepen their partnerships across numerous geographies and areas including card issuance, payment gateway, payment processing, and merchant acceptance and remittance solutions, amongst others.

In this year alone, in addition to Mastercard, Airtel have added partnerships with Samsung, Asante, Standard Chartered Bank, MoneyGram, Mukuru and WorldRemit to expand both the range and depth of the Airtel Money offerings and to further drive customer growth and penetration.

Airtel Africa said profits before tax in the full year ending last month and value of gross assets as of that date was attributable to the mobile money businesses were 143.4million US dollars and 463.2milion US dollars, respectively.

AMC BV, a wholly owned subsidiary of Airtel Africa, 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 once the inclusion of the remaining mobile money operations under AMC BV is completed.

Airtel Africa aims to explore the potential listing of the mobile money business within four years.

However, in the event that there is no Initial Public Offering of shares in AMC BV within four years of first close, or in the event of changes of control without Mastercard’s prior approval, Mastercard have the option to provide liquidity to them, to sell its shares in AMC BV to Airtel Africa or its affiliates at fair market value.

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