- Airtel's mobile money Raise $200 million from San Francisco-based funder, to conduct IPO in four years
- The capital from The Rise Fund will increase the market valuation of Airtel's mobile money
- The deal between The Rise Fund and Airtel's mobile money include a buyback clause
The Rise Fund, a fund vehicle for an investment firm, TPG, is set to acquire a minority stake in Airtel Africa's mobile money business, Airtel Mobile Commerce. The San Francisco-based funder will invest $200 million in the Airtel subsidiary.
Airtel stated that the investment raised from the funder will be used to expand the mobile money footprint across the parent company's markets in Africa. The fund will also push Airtel Africa Commerce towards an initial public offering.
This means Airtel plans to list the shares of its mobile money business and take it public. In a statement seen by Legit.ng, the IPO is expected to hold within the next four years, however, the location of the IPO wasn't stated.
The capital raised from The Rise Fund will increase the market valuation of the Airtel subsidiary. Airtel Africa Commerce's valuation will rise to $2.65 billion after the conclusion of the transactions which will come in two tranches.
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The first stage of the transaction will see the mobile money business receive $150 million, while the second tranche will be the balance, $50 million. This will give The Rise Fund a minority stake in the mobile money transfer firm.
Also, part of the deal includes a buyback option for Airtel if the IPO doesn't hold after four years.
Airtel intends to raise more funds, as the company is still in talks with some potential minority investors. It was gathered from the statement that 25% of the company will be offered in a private placement.
Key points of the deal
- Airtel Africa aims to explore the potential listing of the mobile money business within four years. Under the terms of the Transaction, and in very limited circumstances (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 TPG’s prior approval).
- TPG would have the option, so as to provide liquidity to them, to sell its shares in AMC BV to Airtel Africa or its affiliates at fair market value (determined by a mutually agreed merchant bank using an agreed internationally accepted valuation methodology).
- The option is subject to a minimum price equal to the consideration paid by The Rise Fund for its investment (less the value of all distributions and any proceeds of sale of its shares, and with no time value of money or minimum return built-in) and a maximum number of shares in AMC BV such that the consideration does not exceed $400 million.
The loss was caused by some shareholders dumping the bank's stocks as they engage in profit-taking. The sell-off by the stakeholders had also occurred at a period GTBank is planning to release its financials for the full year 2020.
Fakoyejo Olalekan is a Business and Financial Journalist with over three years of experience in covering finance and business activities within Nigeria and offshore. Prior to joining Legit.ng, he worked at Nairametrics where he wrote financial and investment analysis articles. Olalekan is a resourceful and result-driven journalist with a track record for conducting extensive research and interviews to produce articles that provide different perspectives to market activities.