ALCB Fund invests USD10 million in Sonatel bond issuance

As the Fund Manager to the ALCB Fund, LHGP Asset Management is excited to have played a key role in the largest-ever corporate bond issuance in the UEMOA region. Sonatel Senegal is a West African telecomms company with operations in Senegal, Mali, Guinea Bissau, Guinea-Conakry and Sierra Leone with over 32.7 million clients. Proceeds will be used to improve telecomms infrastructure, including the expansion of 4G and 3G data network coverage in urban and rural areas and enhancements to its Orange mobile money business. The ALCB Fund has played a catalytic role in this transaction by helping to crowd in additional anchor investors and ensuring the full subscription of the issuance.

The ALCB Fund has invested XOF 5.8 billion (USD 10 million) in Sonatel’s XOF 100 billion (USD 170 million) bond issuance. The transaction closed on 9 July 2020. Sonatel is a West African telecommunications company with operations in Senegal, Mali, GuineaBissau, Guinea-Conakry and Sierra Leone; with over 32.7 million clients. Proceeds will be usedto improve telecommunications infrastructure, including the expansion of 4G and 3G datanetwork coverage in urban and rural areas and enhancements to its Orange mobile moneybusiness. Sonatel’s issuance will be the ALCB Fund’s eleventh anchor investment in the UEMOA region and fifth in Senegal. The ALCB Fund has played a catalytic role in this transaction by helping to crowd in additional anchor investors and ensuring the full subscription of the issuance.

Karl von Klitzing, Chairman of the ALCB Fund Board of Directors, said: “The ALCB Fund is very pleased to have been a part of this landmark issuance for the UEMOA region. For over six years, the Fund has been a pioneer in the African local currency bond marketand now has the largest and most diverse local currency corporate bond portfolio on thecontinent. The Fund is proud to have acted as an anchor investor to the issuance of Sonatel andto now include it among its portfolio companies.“In addition to its developmental use of proceeds, the Fund’s interest in this transaction from acapital markets development perspective is driven by the fact it is the largest ever non-sovereignissuance in the UEMOA region, the first issuance by Sonatel in over 20 years, and one of only a handful of real-economy transactions in the region. We also think it is important to ensure thesuccess of local capital market transactions during this period of macro-economic uncertainty.

“Sékou Dramé, CEO of Sonatel, noted:“Sonatel is grateful for the role of the ALCB Fund in making this transaction a success. The ALCB Fund has played a key part, working alongside the transaction’s arranger, in helping to crowd inother anchor investors. The bond proceeds will support Sonatel in meeting its growth objectives in Senegal by improving access to 3G/4G data and fibre broadband, and investing in new activities such as renewable energy, banking and multimedia content. These investments willplay a crucial role in facilitating broad-based economic growth in Senegal by improving interconnectivity, access to information, and access to finance.”

Ababacar Diaw, CEO of IMPAXIS Securities, the arranger and book-runner to the transaction,has said: “We are honored to have been mandated by Sonatel for this landmark transaction in the region. Sonatel is a top-tier credit of the region and leader in the telecommunications sector. Working on this transaction alongside partners such as the ALCB Fund was critical to its success.“The ALCB Fund is a strong anchor investor and a catalyst to the development of capital marketsin the region. Their track-record in Africa is impressive and they played a decisive role in this transaction. The closing of this transaction will represent a new and exciting chapter for IMPAXIS as we seek to continue providing tailor-made financing and advisory solutions to companies and investors dedicated to Africa”

The bond issuance is for a tenor of seven years with a coupon rate of 6.5%. The transaction was fully subscribed with co-investors encompassing local institutional investors, including pensions funds and asset managers, as well as international developmental lenders. The ALCB Fund was founded by KFW in 2012 on behalf of the German Ministry for Economic Cooperation and Development (BMZ). The Fund’s mission is to support the development of African capitalmarkets by promoting primary corporate bond issuances in local currency. This is achieved by supporting African issuers, investors, and intermediaries by acting as an anchor investor and providing technical assistance.To date, the ALCB Fund has invested in over 35 companies across 17 countries. The Fund is rated Baa2 by Moody’s.

Written by
Brock Hoback
Published on
15/7/2020