A look at the year's most noteworthy deals in Africa.

Corporate bonds 

Winner: Growthpoint

Properties’ R600m inflation-linked bond and hedging solutions

Sole lead arranger: Rand Merchant Bank

Hedge provider: Rand Merchant Bank

Growthpoint Properties, a real estate investment trust (REIT), made a small piece of corporate bond history in June 2019 by issuing the first ever inflation-linked corporate bond in South Africa. 

Inflation-linked bonds, where the underlying principal varies in line with inflation, and therefore affects the value of coupon payments, remain a relatively niche asset class in corporate issuance. They are more typically used by sovereign governments seeking to control their borrowing costs and appeal to wider range of investors. With this bond, Growthpoint has now joined the ranks of a relatively select group of businesses who have issued inflation-linked bonds globally. 

The transaction was three years in the making and saw Growthpoint issue R600m ($31.6m)-worth of 10-year notes linked to South Africa’s consumer price index, with a 4.15% coupon. The bond enabled it to lower the cost of its 10-year funding by 15 basis points.

It was a busy year of issuance for the company, which is South Africa’s largest primary listed REIT. Between June 2018 and June 2019 it issued R2.6bn-worth of bonds. It also saw R3.7bn-worth of debt maturing during the year, and R3.3bn of debt maturities due in its 2020 financial year were repaid or refinanced in advance. 

South Africa’s struggling economy, which entered recession in the final quarter of 2019, has created a challenging operating backdrop for Growthpoint. It has an international portfolio of property assets, but the majority are located in South Africa. Despite these challenges it saw 5.3% growth in its distributable income in the year up to June 2019. 

Rand Merchant Bank acted as the sole lead arranger for Growthpoint’s debut inflation-linked bonds and its global markets team also provided complementary hedging solutions to protect it from any adverse inflationary effects. 


Winner: Hidroeléctrica de Cahora Bassa’s $53m IPO

Joint lead managers and bookrunners: Banco BiG Moçambique, Banco Comercial e de Investimentos

Placement syndicate: BancABC, Banco Mais, Banco Único, Absa Moçambique, Banco Nacional de Investimentos, First Capital Bank, Cooperativa de Poupança e Crédito, Ecobank, First National Bank, Millennium BIM, Moza Banco, Société Générale, Standard Bank

At 292 kilometres long, Cahora Bassa in western Mozambique is Africa’s fourth largest artificial lake and home to one of the continent’s biggest dams, with a production capacity of more than 2000 megawatts.

Hidroeléctrica de Cahora Bassa (HCB), the concession company that operates the dam, has been majority owned by the Mozambique government since 2007. In November 2017, on the 10th anniversary of it taking its majority stake, president Filipe Nyusi announced the government intended to sell HCB shares to Mozambique’s citizens, businesses and other institutions in order to increase financial inclusion and access to capital markets among Mozambique’s population and to apply best practice in corporate governance to HCB’s management. 

The 3.3 billion meticais ($53m) initial public offering (IPO), completed in July 2019, was a truly landmark transaction for the country, whose markets had never seen a large-scale IPO before. The number of registered investors on Mozambique’s stock exchange almost tripled from less than 8000 to approximately 23,000 after the transaction.

But it was not only the size of the transaction that posed challenges. In a largely rural economy, where only one-third of the population has a bank account, reaching ordinary retail investors was a major hurdle. 

A placement syndicate of 15 banks, with market share of more than 98% of customer deposits, ensured the country’s banked population could be represented. But to reach the population at large, mobile phone-based subscription channels were developed that enabled individuals to order shares without using internet data or using airtime, and without a bank account. More than one-third of orders came in via this route. 

Demand reached more than two times the initial offer size, leading HCB to double the listing from 2% to 4% of total share capital, and with orders coming in from across all Mozambique’s provinces. 

Financial institutions group financing 

Winner: Standard Bank’s $400m Tier 2 notes

Sole structuring adviser and joint lead manager: HSBC

Joint lead manager: Standard Bank

In May 2019, Standard Bank priced its inaugural Tier 2 bond issuance, with $400m-worth of 10-year non-call five-year bonds. On Tier 2 bonds, Absa and FirstRand are the only other South African banks to have issued these securities, and with little expectation among investors of any further Tier 2 issuance from the country’s banks any time soon there was a certain scarcity value to Standard Bank’s transaction. Indeed, it was the only South African bank issuer to come to market in 2019 on any kind of transaction. 

Against a challenging domestic economic backdrop the bank has been performing steadily, if not spectacularly, in recent years. And investors were keen to buy into South Africa’s largest banking group, with it securing a coupon 30 basis points lower than Absa or FirstRand in their first Tier 2 deals. 

It attracted an order book in excess of $2bn, a fivefold oversubscription and the largest ever order book for a South African Tier 2 bond issuance. Books opened at 07:42 UK time, and strong and steady demand throughout the morning allowed the books to close at 14:20 UK time, having comfortably attracted a range of investors which allowed for pricing to be tightened considerably to a final coupon of 5.95%. More than 100 investors bought into the deal, with a good geographical spread involving investors from the UK, Asia, continental Europe as well as in South Africa. 

Green finance 

Winner: ZECI and NEoT Offgrid

Africa’s 18m green receivables securitisation programme

Co-arrangers: Société Générale, Crédit Agricole 

Guarantor: African Development Bank

In many parts of Africa, access to safe and reliable electricity continues to be a significant issue. Last year’s data from the International Energy Agency found that almost 600 million people in sub-Saharan Africa do not have access to electricity. And even for those that do have a supply, many must rely on crude systems such as petrol and diesel-powered generators, which are bad for the environment and can have a negative impact on people’s health. 

In a bid to circumvent some of the challenges of increasing the capacity of centralised electricity grids, and people’s ability to connect to them, particularly in remote areas, home solar panels are increasingly being looked to as a potential decentralised solution. 

In Côte d’Ivoire, ZECI – an initiative of energy company EDF and start-up Offgrid Electric – has been providing domestic solar energy systems to households since 2016 on a rent-to-own basis. It has the objective of equipping more than 100,000 households with the technology. 

To achieve this goal, ZECI has partnered with NEoT Offgrid Africa (NOA), a platform that invests in distributed renewable energy projects in Africa to create a receivables securitisation facility that ensures ZECI gets the funding it needs to support its work without having to bear undue risk.  

A special purpose vehicle, NEoT CI, has been created whose sole objective is to buy back receivables generated via ZECI’s sales of domestic solar energy systems. This innovative financing mechanism was created with backing from Société Générale and Crédit Agricole as well as the African Development Bank, and will provide a revolving credit facility. The Grameen Crédit Agricole Foundation will also monitor the social and environmental performance of the arrangement. This is the first large-scale local currency securitisation arrangement that has been used to finance the off-grid renewable energy sector in Africa. 

High-yield and leveraged finance 

Winner: IHS Towers’ $500m loan refinancing and $1.3bn bond issuance

High-yield loan

Sole coordinator: Citi 

Bookrunners: Absa, Goldman Sachs, JPMorgan, Rand Merchant Bank, Standard Chartered

Lenders: Access, Ecobank, UBA


Coordinators: Goldman Sachs, Standard Chartered

Bookrunners: Absa, JPMorgan, Rand Merchant Bank, Standard Chartered

With operations across sub-Saharan Africa, IHS Towers is the largest independent mobile telecommunications infrastructure provider in the Europe, Middle East and Africa region. In September 2019, it undertook a significant refinancing exercise, involving both bond issuance and a loan package, to re-profile and extend the maturity of its debt.

IHS was keen to secure a loan arrangement first, by early September, in order to anchor its financing package ahead of a launch for its planned bond issuance. It achieved its objective with the loan signed on September 3, comprising a five-year $610m tranche underwritten by international banks and a $390m naira equivalent tranche raised from Nigerian banks, allowing the company to achieve its preferred currency mix. The transaction helped to establish IHS’s new capital structure and present a confident front before the bond launch.

Just a week later, on September 10, IHS opened the books on its dual-tranche 5.5-year non-call two-year bond and eight-year non-call three-year bond issuance, with the aim of refinancing bonds due in 2021 and raising additional cash for the IHS holding company. The bonds attracted $1bn-worth of orders in the first hour of opening and by the end of the day the order book was three times oversubscribed, enabling IHS to tighten pricing by a significant margin to 7.125% and 8%, respectively. 

The issuance was also upsized from a target of $1bn to $1.3bn, with $500m assigned to the 5.5-year and $800m to the eight-year. Such was the success of the bond issuance that the company was able to downsize its loan financing to $500m. At the time, it was the largest sub-investment-grade corporate transaction out of Africa in 18 months.

Infrastructure and project finance 

Winner: NCP Alcohols’ R1.1bn capital expenditure funding and hedging package

Sole mandated lead arranger: Rand Merchant Bank

South Africa’s NCP Alcohols secured an innovative and highly structured R790m ($41.66m) financing package for its R1.1bn brownfield expansion, enabling the conversion of its ethanol production plant to utilise maize as a more efficient feedstock and boost ethanol production by more than 40%. 

The financing package, arranged by Rand Merchant Bank, combined multiple tranches of debt and derivative hedges to mitigate risks from fluctuating interest rates, maize prices and foreign exchange, and ensure the stable profitability of the business. The financing package included a $22m senior loan, a R105m senior loan, a R225m preference share facility and a R150m working capital facility. For the first time on a facility in South Africa, Credendo, the Belgian export credit agency, provided export credit cover on the $22m senior loan. 

The highly nuanced deal was specially tailored to keep NCP Alcohols’ existing operations running during the construction of the new plant and will allow for a seamless switch over once the new plant is completed. The use of maize as a raw material for ethanol production will enable the production of dried distillers grains with solubles (DDGS). The new production plant will be the first in South Africa to produce DDGS, opening up a new market in the country for this high-protein animal feed source.

NCP Alcohols currently has a 70% market share in South Africa. Its brownfield expansion will increase profitability and enable the company to expand into the rest of Africa.

Islamic finance 

Winner: Mediterranean Textile Company’s $34.2m restructuring and lease financing

Lender: Banque Misr

Egyptian cotton has long been a byword for luxury, and international demand for the fabric continues to be strong. But for Mediterranean Textile Company (Medtex), a leading manufacturer of bedding, towels, shirts and yarn based in Alexandria, Egypt, a sub-optimal debt structure and a relatively high cost of goods sold percentage were holding it back from being able to grow and take full advantage of market opportunities. 

When Medtex approached Banque Misr it was struggling with a debt structure that was impeding its cash flow and financial management. In addition, it was keen to lower production costs by bringing aspects of the manufacturing process that had previously been outsourced in house.

Banque Misr offered Medtex a sharia-compliant package worth $34.2m, comprising a $29.2m sale and lease back arrangement and a $5m direct lease to address these needs. The sale and lease back arrangement is made up of a $15m long-term facility with a six-year tenure and a $14.2m facility with a one-year tenure. It has enabled it to refinance its debts, with Banque Misr purchasing company assets and Medtex leasing them back, and will also provide a source of working capital. Proceeds will be used to settle debts the company holds with other banks. 

Funding from the direct lease will enable Medtex to invest in new manufacturing equipment, enabling it to synthesize bamboo imported from China with cotton. This will simultaneously allow it to decrease its raw material costs and enhance quality at the same time. 


Winner: Ghana Cocoa Board’s $600m dual-tranche development finance institution and commercial loans

Global commercial coordinator and bookrunner: Credit Suisse

Joint commercial underwriter and bookrunner: ICBC 

Global development finance institution coordinator and bookrunner: African Development Bank

Collection agent: Ghana International Bank

Cocoa is big business in Ghana. It is the world’s second largest producer and exporter of cocoa beans, accounting for 20% of global production. Within Ghana, the sector employs more than 4 million people and accounts for about 20% of gross domestic product.

However, historically it has only accounted for a small proportion of the global chocolate market, as significant value-added activities are not conducted within the country. 

The $600m loan facility will provide the Ghana Cocoa Board (Cocobod) with financing for its long-term productivity enhancement programmes in areas such as farm irrigation and warehouse capacity, as well as supporting enhanced processing and value-added services. As the primary agency regulating the Ghanaian cocoa industry and the sole exporter of raw cocoa beans produced in the country, it has significant strategic importance.  

The financing package comprises a dual-tranche development finance institution (DFI) and commercial loan secured against short-term cocoa export sales contract receivables, and was the result of a landmark public and private sector collaboration. Credit Suisse arranged the $350m commercial tranche, with ICBC acting as a joint underwriter. The African Development Bank arranged and syndicated the DFI tranche, including using $50m from its own funding to anchor the transaction – the first time it has leveraged its own balance sheet for a transaction of this kind. The facility was syndicated to global investors from the US, Europe, Asia and Africa, with each tranche attracting a different profile of investor.

Cocobod has borrowed in the debt markets for nearly 30 years, but this seven-year financing is its first longer term arrangement, with three years its previous maximum maturity. The longer term structure will allow it to supplement its annual working capital borrowing with funding for important longer term infrastructure projects.


Winner: Groupe Togocom’s €300m privatisation

Financial adviser to Togo government: Lazard

Sponsor financing: Société Générale 

Groupe Togocom is Togo’s key telecommunications provider and a significant contributor to the country’s gross domestic product (GDP). It was formed in 2017 by the merger of Togo Telecom, the country’s historic fixed-line operator, and Togocel, its mobile telephony operator. 

Its privatisation was a major step for Togo and recommended by the International Monetary Fund to assist the country in achieving its economic aims. In 2018, Togo had launched its Plan National de Développement (National Development Plan) with the aim of structurally transforming the Togolese economy to deliver sustainable and inclusive growth, with specific targets for GDP uplift and levels of debt. The privatisation also supported the government’s policy of seeking increased private sector investment and developing Togo into a regional telecoms and tech investment hub for sub-Saharan Africa. 

Following a tendering process, which took place throughout 2019, with multiple international players expressing an interest in the acquisition, Agou Holding – a consortium of Madagascar’s Axian Group and Africa-focused private equity firm Emerging Capital Partners – was selected as the preferred bidder. Agou Holding had committed to investing Ä245m over a seven-year period in Togocom’s development, demonstrating the long-term benefit it would bring to the Togolese economy.

In November 2019, Agou Holding signed an agreement to acquire a 51% stake of Togocom, which was previously 100% under government ownership, for a market value of more than €300m, with the acquisition to be funded as a leveraged buyout. The deal is one of the largest transactions in Togo’s history and also the first telecoms privatisation in the region since 2009. 

At the time of the agreement, Cina Lawson, Togolese minister of postal affairs and digital economy, said: “This major operation marks a crucial step in the government’s digital roadmap. It will enable us to become the reference market for telecoms in the region and consolidate our leadership in digital transformation.”


Winner: Sahara Power Group’s assets facilities restructuring and redenomination

Sole financial adviser and structuring bank: FBNQuest Merchant Bank

Sahara Power Group is sub-Saharan Africa’s largest private vertically integrated power company. It owns several power generation plants including Egbin Power, the largest thermal power generation plant in sub-Saharan Africa, and Ikeja Electric, Nigeria’s largest power distribution company.

The group owns assets via a number of special purpose vehicles (SPVs) and subsidiaries, which in 2014 and 2015 acquired 70% majority stakes in various Nigerian national and state-owned companies. In order to finance these acquisitions, three subsidiaries/SPVs obtained medium-term acquisition finance facilities – $278m by Kepco Energy Resource Limited (KERL), $278m by NG Power and $95m by New Electricity Distribution Company (NEDC). Due to operating environment difficulties, by 2016 it had become challenging for the subsidiaries/SPVs to service the facilities, and the loans needed to be restructured. 

By 2019 there had been no marked improvement in the operating environment and another restructure was urgently needed. In July 2019, KERL, NG Power and NEDC were able to agree to a restructuring of the existing US dollar-denominated facilities to a Nigerian naira-denominated facility with a 15-year tenor. 

Under the transaction, each lender will create a naira line for the borrower, used to convert the outstanding US dollar facility into naira over a maximum period of one year. The restructure also provided the opportunity for both the borrowers and lenders to amend certain details and conditions within the documentation to make them more appropriate to market realities. 

The transaction has set an important precedent in terms of establishing a realistic and sustainable framework for converting dollar facilities into naira in the power sector. Its tenor and mechanics will also provide increased stability and ensure that the facility can now run smoothly without further need for restructuring. At 15 years, it is the longest tenured syndication in Africa.  The conversion of debt into local currency also removes the risk of issues caused by currency mismatch. 


Winner: New Urban 

Communities Authority’s E£4bn securitisation

Structure adviser and lead arranger: Banque Misr

Promoter and lead underwriter: Sarwa Capital

It has been a busy time for Egypt’s construction industry, with the country in the midst of ambitious plans to construct 20 new cities, providing homes to tens of millions of people. This includes the creation of a new administrative capital to the east of Cairo, which will become home to its first cohort of civil servants in 2021.

Egypt has a well-established programme of new city construction, which has been driven by the New Urban Communities Authority (NUCA) since its creation in 1979. A key plank of these efforts has been to create sustainable cities on desert land outside of the overpopulated Nile Delta region. 

In November 2019, the El Taamir for Securitisation Company (a special purpose vehicle) issued E£4bn ($253.4m)-worth of securitised bonds on behalf of NUCA. The proceeds will allow NUCA to refinance some existing debts and free up funds for investment in its sustainable cities development programmes.   

By detaching the assets from the originator’s (NUCA’s) balance sheet it allowed the issuer (El Taamir) to raise funds more cheaply, with the bond receiving a AA- rating from the Middle East Rating & Investors Service.

The issue was the largest securitisation bond in Egypt in 2019 and the first example of a new short-term debt instrument, which was developed by the Egyptian Financial Regulatory Authority with the support of the European Bank for Reconstruction and Development (EBRD). The EBRD was also a significant subscriber in the bond, investing E£1bn, marking the first time that a foreign party has invested in an Egyptian securitised bond. 

Commenting at the time, EBRD first vice-president Jurgen Rigterink said: “This instrument will help deepen the local capital markets and attract more international players to a key market segment that has been dormant for almost 10 years.”

Sovereign, supranational and agencies financing 

Winner: Côte D’Ivoire’s 230m inaugural social loan

Sole financial adviser: Rothschild

Lead arranger and bookrunner: MUFG

Côte d’Ivoire has big ambitions to improve the provision of vital infrastructure and public services for its citizens in areas such as healthcare, education, water and power supply. Under its Social Programme targets include the construction of tens of thousands of new classrooms, hundreds of thousands of affordable new homes and ensuring electricity supply for all areas with 500 or more inhabitants. 

As part of its efforts to finance these objectives, in 2019 it contracted its first ever social loan, the first African sovereign to do so. The proceeds of the loan have been earmarked for 284 projects that were pre-approved under the country’s 2019 Budget Law and will contribute to the government’s social objectives. The deal’s environmental, social and corporate governance credentials were also checked out by second-party opinion provider Vigeo Eiris in line with international standards for social bonds and green loans. 

Under its 2019 financing strategy Côte d’Ivoire was seeking to develop alternative and innovative financing solutions that deliver competitive terms and a more diversified investor base. This transaction appears to have ticked all of those boxes. 

The deal was also the country’s first ever structured loan and includes an insurance policy from the African Trade Insurance Agency, which will cover 95% of the principal and 12 months of interest. This innovative insurance wrapper provided valuable cover for investors and assisted the sovereign to succeed in attracting high-quality institutional investors and diversifying its overall investor base. 

Syndication of the €230m, seven-year privately placed loan was managed by MUFG, with placement going to a number of Asian institutional investors, predominately with exposure to investment-grade credits. 

The combination of the pre-arranged insurance solution and compliance with international social lending standards appears to have been an attractive combination for investors, with Côte d’Ivoire securing a fixed interest rate of 4.38% for the loan; keen pricing when compared to local and international public debt markets. 


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