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TPG's Rise Fund buys stake worth $200m in Airtel Africa's mobile money business

Airtel Africa sells $200 million mobile money stake to TPG's Rise Fund

Inclusion Times reported last month that Airtel Africa was looking to sell a minority stake in its mobile money business in a bid to raise cash and sell off some assets.

The London-listed telecom giant has found a buyer in TPG's The Rise Fund. Airtel Africa announced that The Rise Fund, the global impact investing platform of investment firm TPG, will invest $200 million in its mobile money arm.

This investment will see the mobile money business -  Airtel Mobile Commerce BV (AMC BV) - valued at $2.65 billion.

AMC BV is an Airtel Africa subsidiary and the holding company for several of Airtel Africa’s mobile money operations across 14 African countries, including Kenya, Uganda and Nigeria.

According to AMC BV, the holding company will use the investment to reduce its debt and invest in network and sales infrastructure in the respective operating countries. The deal will close in two tranches — $150 million invested at first close, with $50 million to be invested at second close.

Airtel Africa still holds a majority stake in the business, even after the deal's completion. Furthermore, the telco is exploring the opportunity to take the business public within the next four years.

In Raghunath Mandava , Airtel Africa's CEO words: “Our markets afford the substantial market potential for mobile money services to meet the needs of the tens of millions of customers in Africa who have little or no access to banking and financial services, and this demand is driving growth.”

He added that Airtel Africa is “pleased to welcome The Rise Fund as an investor in our mobile money business and as a partner to help us realise the full potential from the substantial opportunity to bank the unbanked across Africa.”

Airtel mobile money business is one of the many players driving financial inclusion across the continent and offers a range of services. These services include mobile wallet deposit and withdrawals, merchant and commercial payments, benefits transfers, loans and savings, virtual credit cards and international money transfers.

Airtel Money Services. Image Source: Techtrends Zambia

Typically, these services are present across countries of operation except Nigeria. In the West African country, Airtel has gone through the route of partnering with local banks but has now applied for its own mobile banking license.

Yemi Lalude, a partner at TPG who leads Africa investing for The Rise Fund, said that with financial inclusion being a global issue that is most acute in Africa, the telecom is closing the gap between traditional financial institutions and the millions of unbanked Africans.

In his words, “We look forward to working with Airtel Africa to enhance their mobile money services, broaden its use cases and grow into new markets. With this investment in Airtel Africa’s mobile money operations, we are excited to expand The Rise Fund’s global fintech portfolio and continue to deepen our focus on improving financial inclusion in Africa and around the world.”