Global financial services corporation that specializes in payment processing, Mastercard, has agreed to purchase a minority stake in MTN’s fintech subsidiary, MoMo.
Reports disclose that signing the formal investment agreements will likely occur soon, as both parties near the end of the regular due diligence process. The investment will be closed subject to usual closing conditions.
According to MTN Group President and CEO Ralph Mupita, he said the deal will be structured into two parts, including a commercial agreement on payments and remittance that uses Mastercard’s technology infrastructure to expand in Africa and the investment into a minority stake.
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In his words,
“Following the bespoke process to identify and potentially introduce strategic minority investors into MTN Group Fintech, we executed commercial agreements with Mastercard to support the acceleration and growth of our fintech business’s payments and remittance services.
“MTN and Mastercard also signed a memorandum of understanding which provides for a minority investment by Mastercard into Group Fintech based on a total enterprise valuation of about US$5.2 billion for the business on a cash and debt-free basis. The signing of the definitive investment agreements is expected to occur in the very near term as we approach the finalization of customary due diligence. The closing of the investment will be subject to customary closing conditions.”
MasterCard’s investment in MTN’s fintech subsidiary MoMo is coming a year after MTN in March 2022, announced its plans to look for minority investors in its fintech unit, after separating the division from the carriers telecom business.
MTN disclosed that it search for investors in MoMo, was a move to maximize development in the thriving division. The recent strategic partnership with Mastercard, will no doubt enhance MTN’s fintech capabilities and reach.
Mastercard will leverage its global network, technology, and expertise to support MTN’s digital transformation and innovation agenda. Also, the financial services company will help MTN expand its fintech offerings to new markets and segments, such as e-commerce, remittances, and cross-border payments.
The partnership will also benefit MTN’s customers who will gain access to Mastercard’s wide range of products and services, which includes, virtual cards, QR codes, contactless payments, and digital wallets. Notably, the partnership will also enable MTN’s customers to participate in the global digital economy and access new opportunities.
MTN MoMo is regarded as one of the fastest-growing financial institutions, and also the largest and biggest Fintech company by customer base in Nigeria.
The Fintech startup enables customers to send and receive money, pay bills, buy airtime, access loans, insurance, and savings products, and shop online using their mobile phones. The Fintech also partners with banks, merchants, and other service providers to offer various digital services and platforms.
Over 900 million transactions are reported to be processed monthly across 16 African countries with more than 50 million users on MoMo.
In 2023, MoMo’s volume of transactions in six months, increased by 37% to 8.3 billion, carried out by 61 million active MoMo customers across Africa. MoMo since launch, targets a $5 billion valuation.
The MTN fintech subsidiary envisions a future where the service is home to the banked, unbanked, and underserved. With its innovative strategies, MoMo joins the ongoing efforts by the Central Bank of Nigeria (CBN), to accelerate its drive for financial inclusion.