Airtel Africa has inked a deal to sell roughly a 7.5% stake in its mobile money unit to Qatar Holding LLC, an affiliate of Qatar Investment Authority (QIA), for around $200 million.
This is the latest in a spate of fundraising activities by Sunil Mittal-led
to cut its debt and invest in network. Infusion by Qatar’s sovereign wealth fund will happen via Airtel Mobile Commerce BV (AMC BV), the holding company for several of Airtel Africa’s mobile money operations.
AMC BV, one of Airtel Africa Plc’s wholly-owned arms, will eventually own and operate such mobile money businesses across Airtel Africa’s 14 operating countries once inclusion of these businesses under AMC BV is concluded.
Airtel Africa’s latest deal with QIA comes a few months after it had inked a similar transaction to sell roughly a 3.75% stake in its mobile money unit to global payment processor Mastercard Inc for $100 million. And before the Mastercard deal, it had sold a 7.5% stake in its mobile money business to US private equity firm TPG for $200 million.
“QIA will hold a minority stake in AMC BV upon completion of the transaction (alongside other minority investors), with Airtel Africa continuing to hold the majority stake,” Airtel Africa Plc said in an official statement late on Friday.
The transaction is subject to customary closing conditions.
Airtel Africa said the transaction proceeds “will be used to reduce group debt and invest in network and sales infrastructure in the respective operating countries”.
It said the deal is a continuation of the group’s pursuit of strategic asset monetisation and investment opportunities, and it’s the aim of Airtel Africa to explore a potential listing of the mobile money business within four years.
“We are pleased to welcome QIA as a prospective investor in our mobile money business, joining both Mastercard and TPG’s The Rise Fund as a further partner to help us realise the full potential from the substantial opportunity to bank the unbanked across Africa,” Airtel Africa CEO Raghunath Mandava said in an official statement.
Airtel Africa’s deal with QIA will close in two stages – $150 million will be invested at first close once the transfer of sufficient mobile money operations and contracts into AMC BV has been completed, with $50 million to be invested at second close upon further transfers.
The investment will happen through a secondary purchase of shares in AMC BV from Airtel Africa.
The deal’s first close is expected in August. “From first close, QIA will be entitled to appoint a director to the board of AMC BV and to certain customary information and minority protection rights,” Airtel Africa said.
Airtel needs funds not just to expand 4G operations to fight rival Reliance Jio but also to pay off Rs 43,980 crore in adjusted gross revenue (AGR) dues to the government and build a war chest to buy airwaves in a potential 5G sale. The government is yet to schedule what will be India’s maiden 5G auction.
