Airtel Africa has confirmed London as the primary listing venue for the initial public offering (IPO) of its mobile money unit, Airtel Money. This decision was announced on July 23, with reports suggesting a valuation of approximately $10 billion for Airtel Money. The company aims to raise between $1 billion and $2 billion through the IPO, which would make it one of London Stock Exchange's largest listings in recent years. This move is intended to unlock value that Airtel Africa believes is not fully reflected in its broader telecom business, especially given its current market capitalization of around $16 billion.
During the first quarter ending June 30, Airtel Money demonstrated significant growth, with its user base expanding by 23.3% to 56.5 million. The platform processed $61.4 billion in transactions during this quarter, annualizing to an impressive $245 billion. Quarterly revenue for Airtel Money stood at $404 million, contributing nearly 22% of Airtel Africa's total revenue of $1.853 billion. Despite these strong figures, the mobile money unit's EBITDA margin declined by 363 basis points to 49.1% due to renegotiated intra-group agreements.
Airtel Africa's CEO, Sunil Taldar, stated that a London listing would provide access to a broad international investor base, supporting the ambition to unlock the long-term value of one of Africa's leading fintech platforms. The company previously listed its broader telecom business in London in 2019, raising $750 million at a $3.93 billion valuation. While London offers the advantage of an existing listing and familiarity for institutional investors, the IPO arrives at a time of subdued activity on the London Stock Exchange, which has seen fewer listings in recent years. However, Airtel Money's fundraising target alone could surpass the total amount raised by all companies listing in London in the previous year, suggesting confidence in the market's capacity.
The potential $10 billion valuation for Airtel Money means the share accruing to Airtel Africa shareholders, after accounting for stakes held by TPG’s Rise Fund, Mastercard, and a Qatar Investment Authority affiliate (which collectively hold about 22.1%), would be closer to $7.8 billion. This is still roughly half the parent company's entire market value, highlighting the significant impact this spin-off could have on Airtel Africa's overall valuation. The profitability presented to investors is based on an intra-group contract that can be adjusted, a factor investors will need to consider when assessing the IPO.
