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Nigeria’s digital future strengthened by successful US$800 million IHS bond issue supported by EAIF

Bond “Boosted Nigeria’s ability to raise money on international capital markets”, says EAIF chairman

The Emerging Africa Infrastructure Fund (EAIF) has invested US$50 million in an US$800m bond issued by the Nigerian telecommunications tower business, IHS. EAIF and the International Finance Corporation were named anchor investors in the bond issue. Launched in early October, the bond was successfully marketed and details of EAIF’s investment can now be made public. EAIF is a member of the Private Infrastructure Development Group (PIDG).

With the bond, EAIF is directly contributing to the development of Nigeria’s telecommunications, IT and digital economy and supporting an issue that allows a leading Nigerian company to participate in an international capital market fundraising. The exercise has also helped grow the expertise and experience of the legal and financial professionals in Nigeria involved in the process and attract capital from across the world. While EAIF’s primary role is to finance private sector developers to create or expand infrastructure that can stimulate economic development and help fight poverty, it also has a remit to help build expertise and capacity in financial markets in sub-Saharan Africa, where that is possible and feasible.

EAIF chairman, David White, says:

“This was a large bond issue for the Nigerian market and one of significant strategic importance. Accelerating the development of the country’s telecommunications infrastructure is central to stimulating the entire Nigerian economy. Every Nigerian stands to benefit from investment in digital infrastructure. We are pleased to have been involved in helping to strengthen the telecommunications sector and in boosting Nigeria’s ability to raise money on international capital markets.”

IHS will invest at least US$50 million of the proceeds of the bond in developing its infrastructure across Nigeria, where urbanisation, population increases and rapidly growing use of smartphones is straining capacity and forcing up demand. IHS is one of the largest telecommunications tower owners and operators in Africa and has towers in all 36 of Nigeria’s states, with the majority in densely populated areas.

Nigeria is Africa’s largest telecommunications market, representing 15% of the continent’s telecommunications industry. The country is forecast to have 60 million additional mobile phone users by 2020 and by then the population is expected to be 205 million, an increase of 26 million. 48% of Nigeria’s people already live in urban areas.

Reducing congestion on the nation’s telecommunications infrastructure and creating new capacity is essential to facilitating a dynamic private sector economy and the efficiency of public services. The Nigerian authorities recognise the core role of telecommunications to economic development and are actively encouraging the country’s communications businesses to invest in expanding capacity.

IHS operates a tower sharing strategy. As it expands its network of towers into urban and rural areas, capacity can be opened up to new operators. That has the potential to stimulate competition between operators, helping foster the conditions to bring consumers keener pricing, wider coverage, more reliable service quality and access to new products and technologies.

In addition to business expansion, IHS will use some of the proceeds from the bond to refinance existing loans and general corporate purposes. The bond was launched in Nigeria on 12th October and has been successfully placed.

EAIF is part of the donor-backed Private Infrastructure Development Group. EAIF is funded by the governments of the UK (DFID), Switzerland (SECO), Sweden (Sida) and The Netherlands (DGIS) and by private sector banks and development finance organisations. The Fund’s primary purpose is to stimulate private sector infrastructure projects that help develop new sustainable economic activity and new jobs, thus helping to reduce poverty.

EAIF is managed by Investec Asset Management, one of the largest third party investors in private equity, credit, public equity and sovereign debt across the African continent. Investec Asset Management won the mandate to manage the US$670m EAIF in May 2016, following a competitive tender process.

Nazmeera Moola, head of EAIF at Investec Asset Management, says,

“As a business with its roots in Africa, we are particularly pleased to have been instrumental in the success of the bond issue. As joint anchor investor EAIF played a key role in stimulating awareness and confidence in the issue and demonstrating international appetite for investing in strong African businesses.”