Deals of the year logo 2022

A celebration of the top deals in Africa over the past year.

Bonds: Corporate  

Bidvest’s inaugural $800m 5NC2 bond 

Joint bookrunners: Absa, Bank of America, Barclays, BNP Paribas, Rand Merchant Bank, and Standard Bank 

Bidvest is a South African services, trading and distribution company that operates in areas such as consumer, pharmaceutical and industrial products, freight management and automotive retailing. The company is a well-diversified conglomerate with 60% of its revenues generated from trading and distribution, with the rest from business services. A decent portion of its revenues are also derived internationally (17%).

This was the company’s debut issuance in the international bond markets and the first debut bond by a South African corporate in more than three years.

After a three-day roadshow, including a global investor call that attracted 70 participants from around the word, the deal entered the market with initial price thoughts of 4.125% area. The deal was covered just 30 minutes after the initial price thoughts were announced.

 The order book continued to gain momentum, with orders reaching more than $2bn before the coupon and yield were set at 3.625%, marking a 50-basis-point price compression. It was the lowest ever coupon achieved by a South African corporate in the dollar market.

Total orders reached $2.4bn from more than 100 accounts, with the strong demand allowing Bidvest to issue $800m, an increase from the initial expected size of $700m. Fund managers took up most of the issue by investor type (81%), while UK-based investors represented the biggest share by geography (58%).

The proceeds of the bonds included repaying the group’s revolving credit facilities and providing funding for future acquisitions.

Bidvest’s entrance into the international bond markets is part of its strategic growth and expansion plans, with its debut deal allowing the company to extend its debt maturity profile and diversify its sources of funding. 

Bonds: Sovereigns, supranational and agency  

Rwanda’s $620m 10-year bond

Joint lead managers: Citi and Deutsche Bank 

Rwanda is a super rare visitor to the debt capital markets, with this deal marking the African sovereign’s first bond after an eight-year absence from issuance.

The $620m 10-year deal was issued alongside a tender offer on Rwanda’s only outstanding bond at the time — a $400m trade due in 2023. In addition to the tender, the proceeds of the new bond were also earmarked to fund key priority projects for economic recovery in agriculture, such as export promotion, climate mitigation and health.

After announcing the transaction on July 26, 2021, the new dollar benchmark and tender offer were marketed to investors for a week with more than 30 international investors engaging with a senior government delegation via conference calls.

On August 2, 2021, the deal received more than $1.6bn of orders and ultimately priced at a yield of 5.5%. The demand reflected the scarcity of Rwanda in the bond markets, with investors offered the chance to exit an illiquid off-index bond and enter a new liquid benchmark bond ahead of the summer slowdown. In the end, $150m of the new $650m transaction came from the tender offer, with $339m tendered from the 2023 notes. The rest of the allocation came from new orders. The US and asset managers represented the biggest investor base by geography and investor type with 50% and 78% of the allocation of the deal, respectively.

Equities  

MTN Uganda’s Ush536bn IPO 

Sole transaction adviser, sponsoring broker and bookrunner: Standard Bank  

It was far from smooth sailing for the initial public offering (IPO) of the Ugandan arm of telecoms operator MTN, which marked an important moment in the deepening and expansion of Uganda’s capital markets. The company had been compelled to list its shares on a licenced stock exchange as a condition of its operating licence from the Uganda Communications Commission.

Following an offer period that ran from October 11 to November 22, 2021, it was admitted onto the Uganda Securities Exchange (USE) on December 6. The offering raised Ush536bn ($151m), with shares offered at a price of Ush200 each.

Limited experience and knowledge of equities offerings among the Ugandan population, as well as critical opinions of the deal in the press and on social media, are thought to have dampened investor appetite and created challenges in attracting enough buyers. Nonetheless, completing the listing was a significant achievement for the company, which had engaged in a concerted marketing campaign to increase public awareness and understanding. 

Management met with institutional investors, held more than 150 town hall meetings across Uganda and communicated online via webinars and social media. MTN Uganda, in collaboration with USE, developed an electronic platform through which retail investors could open stockbroking accounts and participate in the IPO. The platform signed up 65,000 new users within weeks of the launch, increasing the number of stockbroking accounts in Uganda to around 90,000, more than 2.5 times the previous total. 

More than 32,000 retail applications were received, including 93% via the electronic platform. It was the country’s largest-ever retail participation in an IPO, with retail interest more than six-times greater than the next largest example.

Financial institutions group financing  

Absa’s $500m additional Tier 1 issuance 

Joint bookrunners: Absa, Bank of America, Barclays, HSBC, and Standard Chartered  

This significant transaction marked Absa’s return to the international bond markets for the first time since 2018, when it made its debut on the international capital markets. It was also the first-ever US dollar-denominated Basel III-compliant additional Tier 1 issuance out of Africa. 

The May 20, 2021 transaction attracted $3bn of investor demand, more than seven times the original target of $400m. This overwhelming demand prompted Absa to increase the issuance to $500m. It also enabled pricing to tighten considerably from initial price talk to a final coupon of 6.375%. More than 200 international investors participated in the deal, significantly diversifying the group’s investor base, with the bulk of the allocations going to fund managers across the UK, US, Europe, Asia and the Middle East.

The transaction was announced and marketed in virtual format via a global investor call and supplemented with individual and group meetings. More than 50 investors participated in the virtual meetings from key financial centres across the globe. The issuance achieved multiple aims, including advancing Absa’s ongoing capital management strategy, demonstrating its commitment to optimising its capital structure and maintaining the group’s presence in the international capital markets. 

Infrastructure and project finance   

Angola’s $1.1bn project financing to develop and improve water infrastructure 

IBRD’s $910m covered loan’s mandated lead arrangers: BNP Paribas, Crédit Agricole CIB, Société Générale, and Standard Chartered 

Lender: Credit Suisse 

Bpifrance’s $165m covered loan’s mandated lead arrangers: Helaba (Landesbank Hessen-Thüringen), and Santander

Lender: Standard Chartered 

According to the World Bank, Angola ranks 138th out of 140 countries for access to safe water and sanitation. Despite benefitting from an abundance of natural water bodies, nearly half of the country’s population lacks access to reliable water supplies due to a run-down infrastructure that is in critical need of strengthening to boost its reliability, capacity, and resilience to climate shocks. 

In June 2021, the government of Angola set a global record for the largest World Bank guaranteed project financing by securing $1.1bn for its landmark Luanda Bita Water Supply Project. The Bita water plant will become one of the largest drinking water plants in Africa, supplying clean water to up to two million people (approximately 25% of Greater Luanda’s population). 

The financing is structured under two facilities: a $910m facility supported by an International Bank for Reconstruction and Development (IBRD) guarantee and a $165m loan backed by the French export credit agency, Bpifrance. 

The 15-year $910m facility is structured with an innovative first-loss and second-loss mechanism: it benefits from an IBRD first-loss guarantee of $500m, while the African Trade Insurance Agency (ATI) will cover the remainder under a second loss scheme. The transaction is a rare example of co-operation between a development finance institution and an export credit agency, and represents one of the largest single-term loan facilities provided by a group of commercial banks for an African sovereign in 2021. 

It is hoped that the unique structuring of the transaction will pave the way for future opportunities involving cooperation with the IBRD and ATI for more big-ticket projects in sub-Saharan Africa. If replicated, the deals structuring has potential to bring enormous social benefits to some of the world’s most under-served markets. 

Islamic Finance   

Al-Marasem’s E£3.2bn syndicated facility

Financial adviser and bookrunner: ADI Capital

Initial mandated lead arranger: Banque Misr 

Mandated lead arrangers: Account Bank, Al Baraka Bank, Arab Investment Bank, Banque du Caire, Egyptian Arab Land Bank, Export Development Bank of Egypt, Housing & Development Bank, Industrial Development Bank, and MidBank 

Over the past two decades, Al-Marasem International for Development Company (Al Marasem) has become one of Egypt’s largest urban development contractors. The company has worked on numerous major public and private projects, such as airports and bridges, and has a strong track record in delivering residential developments, such as Al Hayat Heights in New Cairo.

In 2017, Al-Marasem entered into a partnership with Marina Way Lagoon to develop its Fifth Square Project. The syndicated, medium-term, sharia-compliant facility launched in April 2021 and was formed of two tranches. 

The first E£1.6bn ($86.9m) tranche refinances an existing facility entered into in 2019. The second tranche, of up to E£1.6bn, will partially finance remaining investment costs under the Fifth Square Project — including the construction and development of serviced apartments and a commercial mall. 

The Egyptian real estate market experienced a slowdown during 2019, impacting sales across many developments, including the Marina Way Lagoon development. However, the company has been able to manage these challenges by implementing cost savings and creating a new strategy for the site’s continued development. The construction of the serviced apartments and commercial mall is intended to act as a point of attraction for new buyers. 

The deal was one of the few of its type concluded during the award period in the Egyptian real estate sector, and was oversubscribed by both existing banks involved in the project’s financing and new banks. This reflects the ongoing appeal of the project, despite challenging market conditions.

Leveraged Finance    

Rawasy for Urban Development’s E£8.9bn syndicated long-term facility

Initial mandated lead arrangers and bookrunners: Banque du Caire, Banque Misr and National Bank of Egypt  

Rawasy for Urban Development is a joint venture between Banque Misr and National Bank of Egypt, established under a Central Bank of Egypt initiative, that aims to boost the supply of affordable housing in Egypt. In June 2021, Rawasy participated in a unique, two-part debt financing structure aiming to support Talaat Moustafa Group (TMG), one of Egypt’s most well-known real estate conglomerates, in the financing of its Noor City development. Noor City, located east of Cairo on the Suez Road, is set to include 140,000 housing units, as well as green spaces, sports areas and other facilities.

In June 2021, Rawasy entered an agreement to purchase commercial real estate assets worth approximately E£8.9bn ($483.3m) from TMG’s Madinaty development, with receipts from the sale due to be collected between June 2021 and June 2024. In parallel, TMG entered into a long-term operation and investment agreement with Rawasy, where TMG will act as operator of the commercial assets on behalf of Rawasy, providing a guaranteed rate of return to the latter that will be used to repay the purchase price of the commercial assets.

The second part of the loan was in the form of a discounting facility against sales of residential units at Noor City. Total utilisation and draw-down under both tranches of the facility can value up to E£8.9bn.

This transaction provided an innovative financing solution, supporting a real estate developer to free-up its balance sheet and improve its overall liquidity position, at a time of difficult market conditions due to Covid-19 slowing demand. The facility enabled the developer to continue investment into new and existing projects, accelerating their completion. 

Loans  

Tanzania’s $1.3bn equivalent dual-tranche loan 

Coordinator, mandated lead arranger and bookrunner: Credit Suisse 

Mandated lead arranger and bookrunners: Africa Finance Corporation, African Export-Import Bank, and Nedbank 

Additional mandated lead arrangers: CRDB Bank and Equity Bank 

Tanzania’s $1.3bn loan, issued on April 26, 2021, marked a decisive reopening of the African sovereign loan markets, as it was the first syndication worth more than $1bn since the Covid-19 outbreak took hold in March 2020. The seven- and 10-year tenors, and successful syndication, not only re-established the long-dated sovereign lending market, but also reset risk and pricing references and provided much-needed investor confidence for future sovereign transactions. 

This dual-tranche financing raised a total of $1.3bn equivalent via a seven-year euro tranche and a 10-year US dollar tranche. 

The transaction was notable for its involvement of international commercial banks and development finance institutions, as well as local banks. This arrangement provided the initial anchoring of the transaction with upfront committed debt, as well as giving a positive market signal to target loan market investors to support the financing. The involvement of the Tanzanian bank CRDB in this large transaction was a significant development for the local banking sector.

The investor mix for the deal stands out when compared to other sovereign debt raisings in Africa. More than half of the $1.3bn debt originated from African institutions, showing a shift away from dependence on non-African investors for capital. 

M&A   

DP World’s R12.9bn acquisition of Imperial Logistics

Sole financial adviser to DP World: Deutsche Bank  

Financial advisers to Imperial Logistics: Morgan Stanley and UBS  

In March 2022, Emirati multinational shipping logistics company DP World completed its acquisition of the South African firm Imperial Logistics. The latter is one of the largest freight logistics providers in Africa, with a particular specialism in healthcare, consumer, automotive, chemicals and commodities shipping.

The company had made a cash offer in July 2021 to acquire all issued ordinary shares in Imperial for R66 ($4.51) per share, implying a total consideration of R12.9bn. At the time, the offer represented a 39.5% premium to the closing share price as of July 7, and a 34.2% premium to the 30-day volume weighted average price.

The acquisition is of significant strategic importance for DP World, supporting its transformation into an integrated logistics solutions provider and supporting its entry into Africa. DP World regards the African market as having high long-term growth potential, with the company viewing investment in improved supply chain connectivity as an opportunity to drive trade growth.

Imperial Logistics complements DP World’s existing footprint in Europe and Africa, and will enable the latter to deliver an end-to-end solution to cargo owners across a broad range of sectors. It will also enable DP World to implement its digital capabilities across a wider network, driving supply chain efficiencies and creating value for all users.

As a consequence of the transaction, which saw DP World take 100% ownership, Imperial Logistics was delisted from the Johannesburg stock exchange. 

Restructuring   

Petra Diamonds 

Restructuring financial adviser to Petra Diamonds: Rothschild & Co 

Financial adviser to the noteholders: Houlihan Lokey  

Founded in 1997, Petra Diamonds has grown to become the world’s third-largest diamond miner. Its operations include three underground diamond mines in South Africa and an open pit mine in Tanzania. 

Petra Diamonds entered 2020 in a fragile financial state. Declining rough diamond prices between 2019 and 2020, driven by falling demand and competition from synthetic rivals, led to lower than expected operating revenue. The impact of the Covid-19 pandemic would further batter the global diamond sector, and as consumer demand continued to fall, Petra Diamonds saw its shares nosedive by more than 80%. 

By May 2020, against the backdrop of a challenging operating environment and continued revenue decline, Petra Diamonds was unable to make the interest payments due on its second-lien notes. Weighed down by debt of more than $806m, the company attempted to put itself up for sale in June. However, the formal sale process failed to generate any viable offers. 

By October, Petra Diamonds had entered into formal restructuring talks with its noteholders, which culminated in $650m in bond debt being replaced by $337m in new notes and a partial reinstatement of note debt contributing $30m in new money. The remainder of the note debt was converted into equity, resulting in the noteholder group holding 91% of Petra’s enlarged share capital. 

The debt for equity restructuring achieved a $363m debt reduction, providing Petra Diamonds with the long-term sustainable capital structure needed to reverse its fortunes and deliver growth for its stakeholders. 

Securitisation  

SA Home Loans’ Thekwini Fund 17 R2bn initial issue and R2.4bn tap issue 

Bookrunner: Standard Bank 

SA Home Loans is a South African mortgage provider that has been operating since 1999 as the country’s only specialist, non-bank, mortgage lender. Since 2001, the company has utilised securitisation as the means to generate capital and fund its lending, a pioneering model within the South African market. 

It launched its first Thekwini Fund transaction in November 2001, with the tap issuance of the Thekwini Fund 17 transaction in November 2021 marking the 20-year anniversary of that first transaction. The initial Thekwini Fund 17 took place in March 2021, with R2bn ($140m) split over seven tranches. A R2.4bn tap issuance, also spread across seven tranches, took place eight months later in November 2021. Both issuances were significantly oversubscribed, enabling the allocations to be upsized. 

SA Home Loans’ funding platform has established a high benchmark for securitisation structures in South Africa, with structural features that have been replicated by other non-banks in their asset-backed securities deals, this includes enhanced contingency liquidity buffers. 

Sustainable finance  

Benin’s inaugural €500m SDG bond 

Joint sustainability structuring advisers and joint bookrunners: Citi, Natixis and Société Générale 

Adviser: Rothschild & Co  

In July 2021, Benin became the first African country to issue a Sustainable Development Goal (SDG) bond. It was three years in the making after Benin, in 2018, along with four other emerging economies, was chosen to be part of an International Monetary Fund–UN pilot programme to evaluate their SDG-related financing needs and to assess sources of financing to meet those needs. 

The bond was issued under Benin’s 2030 national development plan and its associated SDG financing framework. The plan is split into four SDG-linked pillars: population (social), prosperity (economy), planet (environment) and peace/partnership (governance). The proceeds of the Ä500m bond will be used exclusively to finance social and environmental projects, mapped against the development plan and relevant sustainable development goals. 

The innovative nature of the bond led to significant interest, with the orderbook peaking above Ä1.2bn. This enabled the bond to be priced with a substantial ‘greenium’ of 20 basis points (i.e. the bond priced at 20 basis points below Benin’s fair value in the secondary markets). The 12.5-year bond has a 4.95% coupon.

Around 91% of the deal was allocated to investors with sustainable investment strategies — specifically, those who incorporate environmental, societal and governance (ESG) criteria into their investments — highlighting the appeal of this ground-breaking bond. 

From a formal standpoint, the bond falls within the parameters of an International Capital Market Association Sustainability Bond, with Benin’s framework found to be fully aligned with the most recent Sustainability Bond Guidelines (2021). Second-party opinion provider, Vigeo Eiris, assessed the bond as making an “advanced” contribution to sustainability, having “full alignment” with best practices and “robust” ESG risk management in place.

Benin continues to partner with the UN’s Sustainable Development Solutions Network, which provides in-depth monitoring and evaluation of the progress and efforts made by the Beninese government to achieve the SDGs.

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