The Emerging Africa & Asia Infrastructure Fund has invested in the African mobile operator’s $300m international public bond, the proceeds of which will strengthen mobile and data connectivity for subscribers in four countries.
The Emerging Africa & Asia Infrastructure Fund (EAAIF), a blended finance vehicle that is part of the Private Infrastructure Development Group, has made an anchor investment of $28m (€25.6m) into the oversubscribed $300m capital market maiden bond issued by Africell.
The US-owned African mobile network operator also attracted other investors, including private debt funds, emerging market funds and pension funds, amongst others. Specific details were not disclosed.
The proceeds of the issuance will be used to support capital expenditure growth across Africell’s subsidiaries in Angola, the Democratic Republic of Congo (DRC), The Gambia, and Sierra Leone, which EAAIF said would strengthen the supply of mobile and data connectivity for approximately 14 million current subscribers.
Speaking to Impact Investor, Folatomi Fayemi, investment specialist at Ninety One, the investment managers of the fund, said: “EAAIF has experience of supporting telecommunications projects, whether they are projects by mobile network operators, data centres or telecoms tower infrastructure companies and Africell falls right into our mandate from a sector perspective.”
“The company is also aiming at organic growth in four markets, including two that EAAIF has not invested in, which was key for us to diversify our pool of capital,” said Fayemi, who added that the firm was also assured by Africell’s management team, which had demonstrated good governance.
Universal connectivity
Fayemi said that from an impact investment point of view the investment into Africell was about supporting universal connectivity.
According to the United Nations, an estimated 3.7 billion people, almost half of the world’s population, currently do not have access to the Internet. The least developed countries are also the least connected, with only 19% online.
“As an impact investor in infrastructure, supporting telecoms infrastructure and MNOs are a priority because we want to provide connectivity to underserved areas. This includes sub-Saharan Africa and Africell’s business model is directed at underserved communities across the continent,” said Fayemi.
Catalysing capital for infrastructure development
EAAIF provides long term commercial debt by making anchor or co-anchor investments to drive public and private investment into what it describes as transformative infrastructure projects across Africa, the Levant and South and Southeast Asia.
Fayemi explained EAAIF had made an original anchor commitment of $40m to attract investment to the bond issuance, but that after seeing an influx of interest from other investors, had reduced its commitment and allocated $28m to the bond to allow the participation of more public and private capital from a variety of local and international investors.
“What we aim to do at the EAAIF and Ninety One is to anchor bonds. We provide firm commitments of how much we will hold as an anchor investor to companies and depending on the level of subscriptions received by a given bond, we will scale back up to a set minimum. On this bond our minimum was around $20m.”
The $300m public bond issuance was oversubscribed with orders of over $550m. Other investments in the fund include a co-anchor investment of $25m made in May of this year into the $850m public bond offering from telecoms tower infrastructure company Helios Towers. The proceeds of the bond were aimed at areas with low levels of mobile coverage and 4G access across nine African countries, serving more than 144 million people.
Another example is an investment of $30m in November 2023 to launch what it EAAIF said was West Africa’s first social asset-backed security to support the Ivory Coast’s government-led Electricity for All programme in support of universal energy access. The $96m bond was issued in local currency.
Strengthening African capital markets
Developing Africa’s capital markets is stated as a key priority for the Private Infrastructure Development Group and Ninety One. Highlighting figures from the International Capital Market Association, which revealed that in 2020 sub-Saharan Africa, excluding South Africa, contributed just 0.02% to the global stock of international bonds, EAAIF said that bonds issued on the African continent presented a tremendous opportunity for global investors and ambitious businesses who wanted to increase access to growth capital from debt capital markets.
“That is where the true impact is,” said Fayemi. “When a commercial fund can support a company in the middle of the DRC for example, it diversifies the pool of capital available, it diversifies the type of access to funding available and going out to capital markets also demands a company’s governance to be improved.”
“Over time, our aim is to create capital markets in emerging market countries in which companies such as Africell won’t need anchor investors like ourselves to raise capital.”
EAAIF said that Africell’s bond issuance was the first by any corporate or state in two of Africell’s four established markets, The Gambia and Sierra Leone.
