Global payments company Mastercard will invest $100 million in the mobile money unit of Airtel Africa, joining the impact investment arm of private equity firm TPG in backing the firm.
Mastercard will hold a minority stake in Airtel Mobile Commerce BV upon completion of the transaction, Airtel Africa said in a statement Thursday. Airtel Africa will retain a majority stake in the unit.
The transaction values Airtel Mobile at $2.65 billion on a cash- and debt-free basis. This is the same valuation at TPG’s Rise Fund had agreed to invest $200 million in Airtel Mobile last month.
The transaction is subject to customary closing conditions, including necessary regulatory approvals.
Airtel Mobile is currently a wholly owned arm of Airtel Africa, part of Indian billionaire Sunil Mittal’s Bharti Airtel group. It is the holding company for several of Airtel Africa’s mobile money operations. It intends to own the telecom company’s mobile money business across all of its 14 operating countries.
Airtel Africa said it has also extended commercial agreements and signed a new commercial framework with Mastercard to deepen their partnerships across numerous regions and areas. These areas include card issuance, payment gateway, payment processing, merchant acceptance and remittance solutions.
The telecom operator also said that the Mastercard deal is part of its efforts to monetize its assets that it aims to explore a potential listing of the mobile money business within four years. It will use the proceeds from the transaction to reduce debt and invest in network and sales infrastructure.
Airtel Africa offers mobile money services under the Airtel Money brand. It offers mobile wallet deposit and withdrawals, merchant and commercial payments, benefits transfers, loans and savings, virtual credit card and international money transfers.
Airtel Money is available across the group’s 14 countries of operation in Africa. However, in Nigeria the group offers Airtel Money services through a partnership with a local bank and has applied for its own mobile banking licence.