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May 23, 2024

The EAIF & IFC-backed FCTC Sonatel Asset Backed Security lists on West African regional stock exchange, boosting digital transformation

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Abidjan – The Emerging Africa Infrastructure Fund (EAIF), a Private Infrastructure Development Group (PIDG) company, and the International Finance Corporation (IFC) has announced that the Fonds Commun de Titrisation de Créances (FCTC) Sonatel bond – backed by the EAIF and IFC as anchor investors – has listed on the Bourse Régionale des Valeurs Mobilières (BRVM), the West African Economic and Monetary Union’s (WAEMU) regional stock exchange.

● The listing helps finance Sonatel’s expansion of digital services in the West African region

● The landmark transaction transforms the digital economy through the creation of online businesses and strengthens local capital markets

● EAIF committed XOF 23.5 billion (c. $39 million) and IFC committed XOF 25 billion (c. $41 million) to the ABS bond issue in January 2024

The landmark transaction, which was officialised at a signing ceremony in Abidjan on Wednesday 22 May, is a major step forward for Sonatel, a leading West African telecommunications carrier with the largest network in Senegal. The proceeds of the listing enable the company to secure liquidity in the secondary market – deepening local capital markets, supporting the acquisition of a 5G licence, extending mobile and internet network infrastructure, including subsea cables, and upgrading mobile money and data services in Senegal.

The XOF 75 billion, receivables-backed, AAA local-rated bond was issued in January 2024, with a XOF 23.5 billion (c.$39 million) commitment from the EAIF and a XOF 25 billion (c.$41 million) commitment from the IFC, with the remaining amount successfully placed with local and regional investors.

The listing demonstrates EAIF and IFC’s ability to catalyse local and regional investor participation in telecommunications-linked corporate debt and in the local asset-backed securities market, deepening the BRVM’s capacity to provide fundraising opportunities to companies operating in the diverse region of 130 million people.

EAIF’s investment in the FCTC Sonatel 2023-2038 asset backed security follows a XOF 15bn (c.$27 million) commitment to the telecommunications firm in 2020. The Fund acted as an anchor investor for its XOF 100 billion (c.$180 million) inaugural corporate bond that was used to upgrade 4G + networks in urban and rural areas in Senegal. The commitment forms part of EAIF’s strategy to support digital transformation through cutting-edge infrastructure that will encourage Africa’s entrepreneurs to expand services through disruptive and impact-linked businesses.

Sonatel will use the proceeds to increase internet access in rural and underserved areas, driving digital transformation through the creation of new jobs and the development of digital skills.

According to 2024 data, multiple countries in West Africa are characterised by some of the lowest internet penetration rates in Africa, with geographies such as Sierra Leone (30.4 per cent), Guinea Bissau (31.6 per cent) and Mali (33.1 per cent) falling below 40 per cent continent-wide average internet penetration in 2022. The need for strategic finance to fund world-class telecommunications infrastructure is a crucial barrier to enhancing internet access in Africa, prohibiting the development of a thriving digital economy by creating tech-empowered business models such as e-commerce, digital financial services and ride-sharing apps.

SGI Invictus Capital and KF Titrisation acted as arrangers in the transaction. Folatomi Fayemi, Investment Specialist at Ninety One, the fund manager of the Emerging Africa Infrastructure Fund, said: “Listing the bond on the regional exchange will help Sonatel raise capital from a diverse pool of investors, supporting the company’s ambitions to improve access to digital services in the West African region. Our latest investment in Sonatel demonstrates our firm commitment to supporting businesses that transform markets through investments in critical infrastructure, driving economic growth through the creation of digital jobs and online businesses.”

Olivier Buyoya, IFC Regional Director for West Africa, said: “We take great pride in witnessing the listing of the bond on the regional exchange, following our support for the first-ever securitization in the telecoms sector in West Africa. This listing not only reflects our commitment to the development and deepening of the regional capital market but also underscores our dedication to supporting regional economic development and promoting investment opportunities.”

Bineta Dior Beye, CFO of Sonatel, said: “We are confident that this transaction will strengthen our leading position in the telecommunications market and enable us to continue to provide superior services to our customers.”

Isaac Mbaye, CEO of Invictus Capital & Finance, on behalf of the Consortium (Invictus Capital & Finance as the arranger of the bond and KF Titrisation as the Management Company of Securitization funds), added: “As a market participant, one of its most important roles is to increase the depth of the regional financial market by strengthening the secondary market. The listing of these bonds fits into this framework by allowing investors to trade them on the BRVM (WAMU regional stock exchange).”

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