EAIF anchors Sonatel’s XOF 100 billion bond issue to support investment in Senegal’s telecommunications infrastructure
Private Infrastructure Development Group (PIDG) company, the Emerging Africa Infrastructure Fund (EAIF/the Fund) is to invest up to XOF*29.5 billion (US$50 million equivalent) in a bond issue that aims to raise XOF100 billion (US$170 million) for investment in the Senegal business of Sonatel S.A, a West African telecommunications company. Sonatel’s bond, which was launched on the 15th of June, will have a seven year term with a coupon rate (interest paid to investors) of 6.50%, payable twice a year. Sonatel will use the bond proceeds to extend and enlarge its 4G + network in urban and rural areas and renew and upgrade service platforms. Sonatel is investing in new activities such as energy, banking and multimedia content, which will benefit from the bond fundraising.
Commenting on behalf of Sonatel, Chief Executive Officer, Sekou Drame, says;
“We are pleased to have EAIF and PIDG involved in supporting us in delivering Sonatel’s vision. We are driven by innovating to improve the customer experience and enhancing digital inclusion in all its forms, socially, commercially and, via Orange Money, financially. Covid-19 has accelerated and highlighted the vital importance of digital infrastructure to economic development.”
The bond issue is aimed at local pension funds and other regional investors. Given current global financial market conditions and recently untested investor confidence in Senegal, EAIF is acting as the bond’s anchor investor and underwriter. The issue is believed to be region’s largest corporate bond fundraising to date.
Sumit Kanodia, an Investment Director at EAIF’s managers, Ninety One, says;
“In the light of Covid-19, telecommunications are more vital to economic recovery and progress than ever. Sonatel’s investment in its largest market will support Senegal’s ability to strengthen its economy and compete on the global stage. EAIF and PIDG are pleased to be playing such a fundamentally important role in the bond issue. We look forward to seeing steady demand for the bond, especially from regional investors supporting a strong local operator.”
IMPAXIS Securities is the sole arranger and book-runner on the bond issues. Its CEO, Ababacar Diaw, says;
“IMPAXIS is honored to be playing key roles in taking such an important bond to market. Sonatel is a great West African success story. It leads in its markets and as a business listed locally. Working with organisations like EAIF is decisive and progressive. The closing of this transaction will represent a new and exciting chapter for IMPAXIS.”
Mr Diaw went on to say that EAIF and PIDG are strong and credible partners to anchor the bond issue.
“The Fund brings specialist knowledge of infrastructure finance. It knows the African telecommunications sector well and takes a patient, long-term view of economic development.”
Sonatel, which has its HQ in Senegal, also has operations in Mali, Guinea, Guinea-Bissau and Sierra Leone. It is the telecommunications market leader in all five countries, operating business and residential fixed line and mobile telephone services, broadband internet, corporate communications, television and mobile money. The Orange Group, which has a 42% shareholding in Sonatel, is the regional market leader in mobile money. Mobile money is a high growth market in West Africa, which saw 1.9 billion transactions in 2018.
Sonatel has entered the off-grid energy market by introducing Orange Energie’s Solar Home System (SHS) kits in all its subsidiary companies. The SHS kits are designed specifically for homes and small businesses in rural areas and are made affordable to all thank to micro payments with Orange Money. In addition to a solar panel and battery, the kits come with accessories, including a mobile phone charger, TV and lamps for lighting.
The Sonatel group was founded in 1985. In addition to the Orange Group’s holding in Sonatel, local private investors own 22.5% of Sonatel’s shares that are listed on the regional stock exchange. The government of Senegal, holds 27% and employees own 8% of the stock.
EAIF recently anchored a successful bond issue for another African telecommunications business, Helios Towers, which raised US$750 million and was over-subscribed. EAIF’s presence in the Helios bond added to investor confidence. The Fund’s key role is to help create the conditions that mobilise private sector investment so that Africa gets more of the infrastructure it needs for economic development.
*XOF is the currency designation for the West African Franc (CFA) which is used by eight West African states; Senegal, Benin, Burkina Faso, Cote d’Ivoire, Guinea-Bissau, Mali, Niger and Togo. CFA means Communauté Financière d’Afrique (Financial Community of Africa)
The Emerging Africa Infrastructure Fund provides a variety of debt products to infrastructure projects promoted mainly by private sector businesses in Africa and parts of the Levant. The Fund helps create the infrastructure framework that is essential to sustained economic stability, business confidence, job creation and poverty reduction. It has to date supported 75 completed infrastructure projects across nine sectors in over 20 African countries. As of the end of 2018 the Fund had invested US$20.082 billion. EAIF is part of PIDG. EAIF was established and substantially funded by the governments of the United Kingdom, The Netherlands, Switzerland, and Sweden. It raises its debt capital from public and private sources, including Allianz, the global insurance and financial services company; Standard Chartered Bank; the African Development Bank; the German development finance institution, KFW,and FMO, the Dutch development bank. EAIF is managed by Ninety One.
The Private Infrastructure Development Group (PIDG) is an innovative infrastructure development and finance organisation which encourages and mobilises private investment in pioneering infrastructure in the frontier markets of sub-Saharan Africa and south and south-east Asia to promote economic development and combat poverty. PIDG delivers its ambition in line with its values of opportunity, accountability, safety, integrity and impact. Since 2002, PIDG has supported 157 infrastructure projects to financial close and provided 209 million people with access to new or improved infrastructure. PIDG is funded by six governments (the UK, the Netherlands, Switzerland, Australia, Sweden, Germany) and the IFC. PIDG TA can provide technical assistance and capital grants to the PIDG companies to meet a range of needs associated with an infrastructure project’s life-cycle. PIDG TA can also provide up-front viability gap funding grants to support PIDG projects that require concessional funding to make a project with strong development impact financeable.
About Ninety One
Ninety One is one of the largest third party investors in private equity, credit, public equity and sovereign debt across the African continent. The Emerging Africa Infrastructure Fund (EAIF) is managed by and fully integrated into Ninety One’s African investment platform. Ninety One manages the entire process on behalf of the EAIF. It markets the Fund, seeks projects, evaluates loan applications, including due diligence, manages transaction administration and monitors the loan portfolio. Since May 2016, when it was awarded the management mandate, Ninety One and its EAIF team have closed over 20 infrastructure transactions with a capital value of USD 650m. The team also led EAIF’s last round of fundraising, raising US$385 million, including US$100 million from Allianz Global Investors and US$50 million from Standard Chartered, a long-standing lender to EAIF.
Ninety One is an independent, active global asset manager listed on the London and Johannesburg stock exchanges. Established in South Africa in 1991, as Investec Asset Management, the firm was a pioneer in emerging markets in Africa. In 2020, almost three decades of organic growth later, the firm de-merged from Investec Group and became Ninety One. Today, Ninety One offers distinctive, active strategies across equities, fixed income, multi-asset and alternative investments to institutions, advisors and individual investors around the world.