Ninety One managed EAIF Anchors Sonatel's XOF100bn Bond Issue

07 Jul 2020

Private Infrastructure Development Group (PIDG) company, the Emerging Africa Infrastructure Fund (EAIF/the Fund) is to invest up to XOF*29.5bn (US$50mn equivalent) in a bond issue that aims to raise XOF100bn (US$170mn) 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 the 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 thanks to micropayments 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$750mn 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)


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