A celebration of the top deals in Africa over the past year.
Corporate bonds
Winner: Liquid Intelligent Technologies’ $620m issuance
Joint bookrunners: JPMorgan, Standard Chartered and Standard Bank
Liquid Intelligent Technologies, previously known as Liquid Telecom, is a pan-African communications solutions provider, with a presence across 13 countries including South Africa, which contributes the greatest share of the group’s revenue. For instance, it has built Africa’s largest independent fibre network, stretching 73,000km across sub-Saharan Africa and it has customers in some of the region’s fastest growing markets, including metropolitan locations.
Prompted by $730m worth of debt maturing in 2022, the business required a refinancing solution. To meet these needs, it issued a $620m 5.5-year non-call two fixed rate bond in February 2021, the first time it had accessed the capital markets since 2017. Investors proved keen to engage with the deal, with price tightening from initial price talk by more than 60 basis points, to 5.5%. The order book was also more than five times oversubscribed, enabling the planned $600m issuance to be upsized by $20m.
The bond attracted investors including anchor orders from the International Finance Corporation (IFC), Deutsche Investitions-und Entwicklungsgesellschaft (DEG) and the Emerging Africa Infrastructure Fund.
It was the first high-yield Eurobond issuance out of sub-Saharan Africa in 2021, and its strong performance is a positive sign for both Liquid Intelligent Technologies and African credits more broadly.
To bolster the financing raised via the Eurobond, Liquid Telecom also accessed a R3.25bn ($228m) term loan and a $60m revolving credit facility. The features of the entire financing package have created a natural currency hedge for the group.
In addition to refinancing existing debts, the group also plans to use the funds to support its growth strategy. This includes a greater focus on cloud and digital services, as well as data centres, in addition to the group’s more traditional sources of revenue.
Sovereign, supranational and agencies financing
Winner: Ghana’s $3bn triple-tranche issuance
Bookrunners: Bank of America, JPMorgan, Morgan Stanley, Standard
Bank and Standard Chartered
In February 2020, Ghana printed a mega $3bn triple-tranche issuance of six-year, 14-year and 40-year bonds worth $1.25bn, $1bn and $750m, respectively. Following a number of investor meetings in London, the bumper issuance attracted orders of almost three times its value, enabling price tightening across all three tranches of 37.5 basis points (bps), 50bps and 50bps, respectively, with short-, medium- and long-date tranches pricing at 6.375%, 8% and 8.875%, respectively.
The 40-year tranche is the longest tenor ever printed by a sub-Saharan Africa issuer, testament to the strong international investor demand, including from Europe and the US, for Ghanaian bonds.
Ghana has long been one of the leading African sovereigns when it comes to accessing the international capital markets, with it being the first sub-Saharan African sovereign (outside of South Africa and the Seychelles) to issue bonds in the international markets. It has also enjoyed continued success in its issuance programme with it becoming the first sub-Saharan sovereign to issue a US dollar-denominated bond post-pandemic in 2021.
Proceeds from the bonds will be used to finance a range of budgetary needs including energy sector debts.
Equites
Winner: Aradei Capital’s MAD660M IPO
International placement adviser: Renaissance Capital
The December 2020 initial public offering (IPO) of real estate company Aradei Capital marked a major moment for northern Africa’s capital markets. It was the first IPO in Morocco since 2018 and the country’s biggest since 2016.
The real estate platform, which holds a portfolio of 29 commercial property assets in 15 cities across Morocco, raised Dh600m ($63m), through its sale of 1.5 million shares via its listing on the Casablanca Stock Exchange. Specifically, 1.25 million of the shares sold were newly issued and a further 250,000 were sold by existing stakeholders. It also marks the achievement of the goal to go public, which has been a clear objective for the company since its formation in 2014.
The successful listing followed a broad marketing exercise, engaging 110 investors in discussion about the company’s long-term growth and plans to develop a portfolio of quality property assets. The order book was multiple times oversubscribed and included a substantial proportion of international buyers, such as investors from the UK, Switzerland and South Africa.
For international placement adviser Renaissance Capital it was also a landmark deal, as it was the bank’s first IPO transaction in northern Africa.
Financial institutions group financing
Winner: First Bank of Nigeria’s $350m issuance
Bookrunners: Citi, Renaissance Capital and Standard Chartered
First Bank of Nigeria (FBN) returned to the international bond markets in October 2020, to offer the first Eurobonds from an African bank that year. Its $350m five-year offering was also the first Eurobond issuance by a Nigerian bank since 2017.
The virtual roadshow efforts for the issue took in conversations with 75 investors, generating significant interest and allowing FBN to proceed with the announcement despite market volatility and a difficult macroeconomic backdrop. The issuance took place against a backdrop of domestic protests against police brutality, which attracted considerable international attention. A number of other Eurobond issuers put their plans on hold at this time.
Following strong demand on launch day, the issue was upsized by $50m to $350m, as well as some price tightening. Investor interest came from Europe, the UK and the US, as well as considerable orders from African investors, with the offer 1.7 times oversubscribed. The strong performance of this benchmark issuance was all the more impressive given the difficult political backdrop.
Infrastructure and project finance
Winner: Mozambique LNG 1 Project’s $15.4bn financing
Financial adviser: Société Générale
Mandated lead arrangers and bookrunners: Absa, Standard Bank, SMBC, IDC, ICBC
Mandated lead arrangers: MUFG, Mizuho Bank, Standard Chartered,
Société Générale, CDP Lenders: DBSA, Nedbank, Rand Merchant Bank, Nippon Life, Shinsei, SMTB, Credit Agricole, JPMorgan, Afreximbank DFI/ECA direct loans and covered providers: AfDB, UKEF, US Exim, Kexim, SACE, Atradius, NEXI, UKEF, JBIC, ECIC
In spite of the Covid-19 pandemic leading to unprecedented economic shocks and a historic market collapse in oil prices, Total, one of the world’s seven largest oil and gas companies, secured $15.4bn in project financing for the construction of a vast Liquefied Natural Gas (LNG) plant in northern Mozambique.
The Mozambique LNG 1 project is the single largest direct investment into Africa and the largest natural resource development in Africa’s history. The project financing includes direct and covered loans from nine export credit agencies (ECAs), 19 commercial banks and a $400m loan from the African Development Bank (AfDB). The ECAs and the AfDB provided the lion’s share of the funding, accounting for nearly $14bn of the total loans and guarantees, which carry an 18-year tenor.
The development of Mozambique’s Golfinho-Atum natural gas fields will involve the construction of a two-train liquefaction plant, with a total capacity of 13.1 million tonnes per annum (mtpa) of LNG. In the future, the plant’s production capacity may be further expanded to 50mtpa, which could position Mozambique among the world’s top five global LNG suppliers.
Alongside the Covid-19 pandemic, the project continues to face numerous challenges, including vulnerability to severe weather events that frequently affect the country’s northern coast and a deteriorating security situation across the broader region.
Mozambique LNG 1 has the potential to transform the country by providing thousands of jobs for local Mozambicans, while significantly boosting its gross domestic product and export earnings, as well as providing diversity in LNG supply and more competitive pricing to global markets.
Islamic Finance
Winner: Al-Marasem International for Development’s E£1.5bn financing
Bookrunners and mandated lead arrangers: Banque du Caire and Banque Misr
Efforts to construct a new capital city for Egypt, around 35km to the east of the historic capital Cairo, have been underway for the past five years, with the aim of creating thousands of new homes and more than a million new jobs. The New Administrative Capital is set to be a 270-square-mile hub, with 21 residential districts to accommodate up to five million people, as well as new churches and mosques, schools, colleges, a conference centre, medical facilities and a large park, along with new government buildings.
In June 2020, Al-Marasem International for Development accessed a sharia-compliant E£1.5bn ($95m) syndicated facility to finance the development of the R5 district of the city, which will be a “new garden city” built in an “old French” architectural style, similar to that of Cairo’s garden city. The estimated total cost of the development, which will include 23,000 residential apartments and villas as well as other facilities, is E£9.7bn.
This facility was one of several sharia-compliant facilities which Al-Marasem International for Development Company accessed during 2020 to fund the development of the New Administrative Capital.
Leveraged Finance
Winner: Peregrine’s leveraged buyout
Underwriter and initial mandated lead arranger: Nedbank
Participating institutions: Absa, Investec, Nedbank and Standard Bank
Peregrine is a South African-based provider of investment management solutions, and until October 2020 had been listed on the Johannesburg Stock Exchange.
In October 2020, private equity firm, Capitalworks, acquired the business after securing syndicated leveraged buyout funding and a share-backed facility based on Peregrine’s equity value. The structure of the funding package was designed to provide maximum protection for funders, while also minimising implementation risks associated with the acquisition.
Peregrine shareholders were offered R21 ($1.5) per share in cash and/or the option to retain unlisted stock in one of the buyout vehicles which was set up in order to complete the transaction. It was important for the completion of the transaction that the right balance of shareholders opted to cash in their shares, as well as to remain invested in the company. This was one of the complexities that which needed to be managed in the deal.
Syndication for the funding package was launched in June 2020 to invited funders, several months after the buyout offer had been announced to the market. This was a deliberate strategy, as at the time the buyout offer was announced in March 2020, there was considerable concern around the Covid-19 pandemic in the region and national lockdown measures were beginning to be implemented in South Africa.
The additional period allowed the business to demonstrate its continued trading performance throughout the disruption of the pandemic, the lockdown measures and market volatility. Following a concerted effort of communication and investor engagement over those months, the funding package was successfully syndicated and oversubscribed.
The transaction represents one of the most significant leveraged public-to-private transactions in the South African market in the past decade, and was executed against a highly challenging market backdrop.
Loans
Winner: Bank of Industry’s $1bn loan
Mandated lead arrangers and bookrunners: Credit Suisse and Afreximbank
Bank of Industry (BOI) is the largest development financial institution (DFI) operating in Nigeria, with a mandate to create jobs and alleviate poverty by supporting domestic corporates. In 2019, for instance, it helped to create more than one million jobs, both directly and indirectly.
BOI, fully owned by the Nigerian government, previously primarily relied on government funding and DFI lending (from institutions such as the African Development Bank). However, during 2020, Credit Suisse led on two loans for BOI, including the $1bn facility in December 2020, which was underwritten jointly with Afreximbank. The loan, which was upsized from $750m, was one of the largest in sub-Saharan Africa during 2020 and received strong interest from a diverse range of investors. At the time of closing, more than 20 investors had joined the loan, including regional banks as well as several European and North American asset managers.
The proceeds from the loan will be used by BOI to finance local corporates in key sectors of the economy, boost local trade and support job creation. Any unutilised funds will be invested by BOI with the central bank.
The US dollar facility follows on from the success of a €1bn euro-denominated loan which was closed in the first quarter of 2020, pre-Covid 19.
M&A
Winner: Assore’s R7.8bn share buyback
Sole financial adviser and sponsor: Standard Bank
Assore is a company operating within the mining industry, with a complete ‘mine-to-market’ business model, comprising of mining, smelting and marketing of iron ore, chrome ore and manganese alloys.
In March 2020, Assore bought back 17.4% of its issued share capital and subsequently delisted from the Johannesburg Stock Exchange (JSE). This was a significant event, as the company had been listed on the JSE since 1950.
However, despite its public listing, it was majority owned by the Sacco Family Trust and Sumitomo Corporation, which held 52.4% via Oresteel Investments, and 26.1% was held by black economic empowerment shareholders. A further 4.1% of shares were owned by members of the Sacco family, effectively leaving only 17.4% as a free float.
The transaction brought benefits to both management and shareholders. From a management and strategic shareholder perspective the public listing was not providing significant benefits, therefore the buyback and delisting would allow more consolidated control and fewer reporting obligations. For the minority shareholders, the low liquidity of the shares meant that they could not easily trade out of the shares.
The minority shareholders were offered R320 ($22) per share from internal cash resources. According to Assore, this represented an 80% premium to the closing price on the last trading day prior to the announcement, a 51% premium to the 30-day volume-weighted average price, and a 36% premium to the 60-day volume-weighted average price.
Ensuring the transaction proceeded smoothly required careful management. This included securing irrevocable commitments from key minority shareholders to vote in favour of the scheme ahead of the general shareholder meeting. It was reported that following the deal the stakes held by Oresteel, the black economic empowerment shareholders and the Sacco family in Assore would be increased pro rata to 63.4%, 31.6% and 5%, respectively.
Securitisation
Winner: New Urban Communities Authority’s E£10bn securitisation receivables issuance
Lead arrangers and issuance managers: National Bank of Egypt, Commercial International Bank, Arab African International Bank and the Housing and Development Bank
The New Urban Communities Authority (NUCA) is an economic authority responsible for developing Egyptian real estate resources in urban communities. It has ambitious investment and development plans in more than 20 cities across Egypt to accommodate the country’s growing population and economic growth.
In general, it has financed its activities via internally generated cash flows (mainly from land sales), as well as bank loans. This transaction, executed in July 2020, saw the NUCA replace existing bridge facilities with longer-term funding by securitising receivables. The authority issued E£10bn ($637m) worth of securitised bonds via its special purpose vehicle, El Taamir, with multiple tranches and maturities ranging from three to seven years. The bond offering has allowed NUCA to restructure its balance sheet, free up resources for further investment in its plans and diversify its funding sources.
Following the 2011 revolution in Egypt, securitised lending activity had ceased within the public sector. NUCA’s bond programme marks a significant step in the revival of this market and is an important alternative to bank finance. It is also the largest issuance ever seen in Egypt’s debt capital markets.
The European Bank for Reconstruction and Development is a strong supporter of the programme and the deepening of the local debt capital markets more generally, and invested E£1.5bn, as the sole international financial institution participant.
It is hoped that this issuance will demonstrate the viability of this method of financing and encourage other local borrowers to pursue similar transactions.
Sustainable Finance
Winner: Egypt’s $750m inaugural green bonds
Global coordinators, joint lead managers and bookrunners: Citigroup, Crédit Agricole, Deutsche Bank and HSBC
In September 2020 Egypt became the first sovereign in the Middle East and north Africa region to issue a green bond, establishing a market precedent in the region, which, it is hoped, will encourage other issuers in the region to follow its lead.
Not only was the $750m transaction a symbolic success but it also achieved impressive pricing with a 5.25% coupon, significantly lower than initial price talk and comparable with a standard bond issuance. Following considerable demand, which hit more than $3.7bn at the peak, the issuance was also upsized from the initially planned $500m.
In total, 220 investors placed orders including several that were primarily attracted to the deal because of its green credentials, including some investing in an Egyptian issuance for the first time. By investor type, asset managers took the bulk of the issue, with 77%, followed by pension funds and insurance (9%) and banks (8%).
Egypt will use the proceeds of the bond to finance a wide range of green projects such as sustainable transportation, water desalination plants and renewable energy infrastructure. Envisaged landmark projects include the construction of the Cairo monorail and a 250-megawatt wind project in the Gulf of Suez.
