International Finance Corporation (IFC), the private sector arm of the World Bank Group, has invested in two receivables-backed bonds issued by a securitization vehicle of Sonatel, a leading mobile network operator in West Africa.
Proceeds from the bonds, the first securitization in West Africa's telecoms sector, will support Sonatel's expansion of 4G coverage and fibre connectivity in rural parts of Senegal, increase bandwidth, and improve digital infrastructure, as well as contribute to job creation in the region.
Sonatel, which operates in five countries in West Africa and is owned by Orange MEA and the Government of Senegal, will also use the proceeds to invest in new technologies.
IFC invested 25 billion CFA francs (XOF) (US$41 million) in the two bonds out of the total XOF75 billion, representing a third of the total issuance in Senegal's local currency.
The Emerging Africa Infrastructure Fund (EAIF), a private infrastructure development group (PIDG) company, the co-anchor investor, invested XOF23.5 billion, with the remaining amount publicly placed in the market.
Invictus Capital & Finance acted as the arranger while KF Titrisation is the management company of the deal.
Narrowing digital divide
"IFC is proud to support the first-ever securitization in the telecoms sector in West Africa," says Olivier Buyoya, IFC regional director for West Africa. "Through this partnership, we will help reduce the digital divide and position Senegal as a hub for digital transformation in the region, providing new growth opportunities for stakeholders and creating thousands of jobs in the telecoms sector."
At the end of the subscription period on January 12, the total subscriptions mobilized from investors excluding IFC and EAIF amounted to XOF26.5 billion. This includes 57% from investors in Senegal, 42% from investors in the WAEMU (West African Economic and Monetary Union) zone excluding Senegal, and 1% from investors outside the WAEMU zone.
The transaction garnered interest from a diversified pool of participants including banks, individual investors, pension funds, and insurance companies, among others.
The project falls under the World Bank's Joint Capital Markets Programme (J-CAP) to develop and deepen WAEMU's capital market. J-CAP's work in WAEMU is supported by the governments of Germany and Norway.
IFC's investment will also be supported by the International Development Association (IDA) 20 Private Sector Window Local Currency Facility, which helps provide longer-term local currency funding that is not readily available in the market.
