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Qatar Investment Authority (QIA) Plans to Invest $200 Million in Airtel Africa’s Mobile Money Business

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Airtel Africa Plc - Investors King

Airtel Africa has signed an agreement with under which Qatar Holding LLC, an affiliate of the Qatar Investment Authority (QIA), plans to invest $200 million in Airtel Mobile Commerce BV (“AMC BV”), a subsidiary of Airtel Africa plc (the “Transaction”).

The Transaction values Airtel Africa’s mobile money business at $2.65 billion on a cash and debt free basis. 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. The Transaction is subject to customary closing conditions.

Following the announcement on 18 March 2021 of a $200m investment in AMC BV by TPG’s The Rise Fund, on 1 April 2021 of a $100m investment in AMC BV by MasterCard and the sale of the Group’s telecommunication towers companies in Madagascar and Malawi on 23 March 2021, the Transaction is a continuation of the Group’s pursuit of strategic asset monetization and investment opportunities, and it is the aim of Airtel Africa to explore the potential listing of the mobile money business within four years.

The proceeds from the Transaction will be used to reduce Group debt and invest in network and sales infrastructure in the respective operating countries.

Airtel Africa mobile money services

Operating under the Airtel Money brand, Airtel Africa’s mobile money services is a leading digital mobile financial services platform catering to a large addressable market in Africa (characterised by limited access to formal financial institutions with limited banking infrastructure) and includes mobile wallet deposit and withdrawals, merchant and commercial payments, benefits transfers, loans and savings, virtual card and international money transfers.

Mobile money services are available across the Group’s 14 countries of operation, 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. It is the intention that all mobile money operations will be owned and operated by AMC BV.

In our most recent reported results for Q1’22, the mobile money services (corresponding to all the businesses that are intended to be transferred to AMC BV) delivered a strong operational
performance:

 Generated revenue of $124m ($496m annualised), and underlying EBITDA of $60m ($240m annualised) at a margin of 48.8%.
 Year on year revenue growth for the quarter was 53.7% in constant currency, largely driven by 24.6% growth in the customer base to 23.1 million, and 25.4% ARPU growth.
 Growth in transaction value was 64.4% (constant currency) to $14.7bn ($59bn annualised).

Our mobile money business benefits from strong network presence with our core telecom business through the extensive distribution platform of kiosks and mini shops as well as dedicated Airtel Money
branches supplementing our extensive agent network, to facilitate customers’ access to assured wallet and cash.

We have a clear strategy to continue to drive sustainable long-term growth in Airtel Money with a focus on assured float availability, distribution expansion and increased usage cases for our customers.

Last year we added partnerships with Mastercard, 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.

The profits before tax in the full year ending 31 March 2021 and the value of gross assets as of that date, attributable to the mobile money businesses were $185m and $668m, respectively.

Key elements of the Transaction

 Agreement values Airtel Africa’s mobile money business at $2.65bn on a cash and debt free basis.

 AMC BV, a subsidiary of Airtel Africa, is the holding company for several of Airtel Africa’s mobile money operations; and it is intended that ultimately it shall own and operate the mobile
money businesses across all of Airtel Africa’s fourteen operating countries once the inclusion of the remaining mobile money operations under AMC BV perimeter is completed.

 QIA will invest $200m through a secondary purchase of shares in AMC BV from Airtel Africa. The transaction will close in two stages: $150m will be invested at first close, subject to customary closing conditions, including necessary regulatory filings, with $50m to be invested at second close once further transfers of certain mobile money operations and contracts into the AMC BV perimeter have been completed.

The Transaction 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.

Comment on the deal, Raghunath Mandava, CEO of Airtel Africa, said “With today’s announcement 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.”

Mansoor bin Ebrahim Al-Mahmoud, CEO of QIA, added that “We are delighted to build on our support of Airtel Africa in promoting financial inclusion to the large and growing population of Sub-Saharan Africa. Airtel Money plays a critical role in facilitating economic activity, including for customers without access to traditional financial services. We firmly believe in its mission to expand these efforts over the coming years.”

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Enko Opportunity Growth Fund Ltd Invested N3.8 Billion in Ecobank

Enko Opportunity Growth Fund Ltd, linked to Mr. Alain Nkontchou, a Director of Ecobank Transnational Incorporated (ETI), has invested a total sum of N3.8 billion in Ecobank Transnational Incorporated.

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Ecobank - Investors King

Enko Opportunity Growth Fund Ltd, linked to Mr. Alain Nkontchou, a Director of Ecobank Transnational Incorporated (ETI), has invested a total sum of N3.8 billion in Ecobank Transnational Incorporated.

Enko Opportunity Growth Fund, a hedge fund company, acquired a total of 322,010,114 shares at N11.83 a unit in Ecobank Transnational Incorporated between March 30, 2022 to May 5, 2022, the bank disclosed this in a statement signed by Madibinet Cisse, Company Secretary.

The transaction was carried out at the Nigerian Exchange Limited (NGX) trading floor in Lagos, Nigeria.

The investment, classified as insider trading, was reported on Friday in line with the Nigerian Security and Exchange Commission (SEC) despite commencing purchase in March. Meaning, the announcement was done to further strengthen the bank’s perception among investors, especially after announcing strong positive financial results for the first half of 2022.

For the first half of 2022, Ecobank announced a 24% increase in profit after tax from N62.553 billion to N77.313 billion.

Commenting on the sound performance, Ade Ayeyemi, CEO of Ecobank Group, said our results for the first six months of 2022 reflect not only the benefits of the firm’s diversification but also our resilience and capabilities to continue serving our clients and customers in a challenging environment and still generate adequate returns responsibly for our shareholders. As a result, we delivered a return on tangible equity of 19.5%, a record, and increased earnings per share for shareholders by 24% year-on-year.

In addition, profit before tax increased by 24% to $261 million and by 53% if you adjust the increase for the significant depreciation of some of our critical African currencies to the US dollar, says Ade Ayeyemi, CEO, Ecobank Group.

 

 

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The US$6bn Water Investment Programme Set to Transform Zambia’s Social-economic Outlook by 2030

This week the Zambian Government launches its game-changing US$6billion Zambia Water Investment Programme during the African Union mid-year Summit in Lusaka.

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water projects - Investors King

By Alex Simalabwi, Executive Secretary  of the Global Water Partnership Africa-Coordination

This week the Zambian Government launches its game-changing US$6billion Zambia Water Investment Programme during the African Union mid-year Summit in Lusaka.

The Programme is part of the Continental Africa Water Investment Programme (AIP) that was adopted by African Union Heads of State and Government as part of the Programme for Infrastructure Development in Africa – Priority Action Plan 2, during the AU Summit on 7th February 2021.

The Country is faced with challenges of poor access to clean water and decent sanitation. Joint UNICEF and WHO statistics indicate that over 6.4 million people in a population of about 18 million, do not have access to clean running water and nearly 8 million lack access to adequate sanitation. This affects the social economic development of the country with women and girls, mostly tasked with collecting water and doing home chores, bearing the brunt of it.

Estimating the relationship of water with economic growth and jobs is challenging due to lack of data, particularly in regard to determining the degree of water dependency of jobs. However, the UN reports that for every dollar invested in water and sanitation, there is a US$4.3 Ureturn in the form of reduced health care costs for individuals and societies around the world.

The UN estimates that three out of four jobs that make up the global workforce are either heavily or moderately dependent on water. Investment in small-scale projects including rainwater harvesting providing access to safe water and basic sanitation in Africa could offer an estimated economic return of US$ 28.4 billion a year, or nearly five per cent of gross domestic product (GDP) of the continent. Such investments have a beneficial effect on employment.

Led by the Ministry of Water Development and Sanitation, the Zambia Water Investment Programme hopes to leverage up to US$6 billion in water security investments and the creation of about 200,000 direct formal jobs by 2030. In addition, the Programme envisages that at least 800,000 indirect jobs will be created for vulnerable and poor youths, women, and other marginalized groups.

What makes this Investment Programme different from other such frameworks is that, firstly there is high-level political commitment at the Head of State level within the country and internationally, through the African Union and the High-Level Panel of former and current Heads of State. The Panel was launched by the AU Chairperson and President of Senegal H.E. Macky Sall, at the 9th World Water Forum in Dakar, Senegal on 25th March, 2022. Its objective is to develop actionable pathways for mobilising $30 billion annually by 2030, for implementing the AIP, under which Zambia’s Water Investment Programme falls, and to close the existing water investment gap in Africa.

The Panel is led by three Co-chairs:

  • E. Macky Sall, as Co-Chair in his capacity as Chairperson of the African Union.
  • E Mark Rutte, Prime Minister of the Kingdom of The Netherlands
  • E. Hage Geingob, President of the Republic of Namibia
  • E Jakaya Kikwete, (Alternate Co-Chair) former president of the United Republic of Tanzania, who is also Chairperson of the Board of Global Water Partnership Southern Africa and Africa Coordination.

Secondly, the Investment Programme also known as AIP Zambia, is home-grown and aligned to the Four Strategic Development Areas of Zambia’s Eighth National Development Plan, 2022-2026. It was widely consultative and inclusive with inputs from development partners and local stakeholders. Global Water Partnership (GWP) Zambia joined the water sector development partners in designing the Programme.

AIP Zambia comes with a first of its kind mutual accountability tracking tool, the AIP-PIDA Scorecard that was adopted by AU Heads of States in February 2022. The scorecard will track progress in investment mobilisation, identify gaps, bottlenecks and define areas for mutual accountability. AUDA-NEPAD will report its progress to the African Union every six months.

The Programme recognizes that financing is a key issue, so it promotes Public-Private Partnerships (PPPs) to water resourcing via the Blended Finance approach, as a viable way of making development priorities on water more investable. According to a recent Report by WaterAid, this approach involves the strategic use of public or philanthropic development capital to de-risk investments related to the SDGs, in order to attract commercial capital from private investors who would otherwise not have participated.

Rather than rely on treasury and donor funding, AIP Zambia hopes to leverage a water development fund, resourced via blended financing mechanisms that will leverage Official Development Assistance (ODA) and grant finance to de-risk priority water investments.  The various financing models include sovereign wealth funds, green local municipal water bonds, international investment guarantees, institutional investors and private equity, foundations, value-based impact investment, and climate finance. For local and rural populations, off-grid solar powered water distribution networks combing local water-energy-food security, scaling up rainwater harvesting schemes will be central.

The AIP Zambia delivery model will build on experiences from similar delivery units from other parts of the world including India’s Swachh Bharat Mission led by Prime Minister Narendra Modi, who slashed through India’s notorious red tape and pushed aside thorny political divisions to see it through. According to UNICEF the number of people without a toilet in India reduced from 500 million to 50 million in four years, between 2014 and 2018.

Positive spin-offs of the Zambia Water Investment Programme are expected to benefit communities in rural areas and densely populated shanty townships. The Programme will also see the creation of gender-centred climate resilient programmes, skills training and the growth of green-economy related small and medium enterprises.

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Real Estate Remains a Hot Investment in Summer 2022

For those worried that the housing market is about to cool off, Swapnil Agarwal, CEO of Nitya Capital & Karya Property Management, has encouraging words for investors.

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For those worried that the housing market is about to cool off, Swapnil Agarwal, CEO of Nitya Capital & Karya Property Management, has encouraging words for investors.

“Currently, there is a 6.8 million house shortage in the USA,” Agarwal says. Add to that supply chain issues for new home building materials, and interest rates, while going up, are still relatively low. So, even in the wake of different economic cycles, conditions, and COVID-19, the demand for multifamily real estate assets has continued to remain a stable area of investing and even growth, Agarwal explains, pointing to several key factors:

– Money supply growth. Higher volumes of capital are held by pension funds, endowments, insurance companies, private equity, venture funds, and family offices, all pursuing a limited set of attractive investment opportunities.

– Desirable foreign investment. The U.S. continues to be viewed as a safe haven for foreign capital; investors increasingly seek tangible assets with current income and downside protection.

– Wage disparity and the cost of living. As the wage gap and income disparity across the U.S. widen, and the population grows, the lower middle class is being forced to find more affordable housing alternatives. The result is an increasing demand for value-add properties.

– Homeownership trends. Homeownership levels remain near 20-year lows at 63%, and rental demand continues to grow. Stringent borrowing requirements imposed by traditional lenders make it increasingly difficult for the lower middle class to purchase homes. In addition, millennials are increasingly forgoing homeownership and moving to larger cities than prior generations fueling further demand for multifamily units.

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