Private Infrastructure Development Group (PIDG) company, the Emerging Africa Infrastructure Fund (EAIF/the Fund) plans to invest up to US$50-million in a bond issue with the objective to raise US$170-million for investment in Senegal-based telecommunications services provider Sonatel S.A.
According to a statement released to the media, Sonatel’s bond, launched on 15 June 2020, 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.
The telco is also investing in new activities such as energy, banking and multimedia content, which the company claims also stands to benefit from the bond fundraising.
Commenting on behalf of Sonatel, CEO 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, adds: “IMPAXIS is honoured 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.”
Diaw adds 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.”
Senegal-headquartered Sonatel also has operations in Mali, Guinea, Guinea-Bissau and Sierra Leone.
It operates business and residential fixed line and mobile telephone services, broadband internet, corporate communications, television and mobile money.
The Orange Group has a 42% shareholding in Sonatel.
Sonatel 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.
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.