Archive for the 'Republic of Congo' Category

$1.8bn Helios Towers closing London IPO on 14 Oct

Heliso Towers raising in London for Africa expansion and 5G

Africa’s next mega-listing on the London Stock Exchange is an African company that operates 7,000 towers in the mobile telecommunications sector that continues to show strong growth. According a a recent report on Reuters, Helios Towers Ltd has priced its initial public offering (IPO) at 115-145 pence per share on 2 October, implying a total valuation of $1.42 billion to $1.79bn.

According to the report, the deal close books on 14 October and first day of trading is expected on 15 October. Bank of America/ Merrill Lynch International, Jefferies and Standard Bank are joint global coordinators while Renaissance Capital and EFG Hermes are joint bookrunners. Helios is planning a free float of about 25% of its shares.

The pricing is down from earlier suggestions of up to £2bn ($2.47bn), including in the Financial Times, when the listing was first announced on 12 September. There have been several global listings this year including e-commerce company Jumia in New York, telco Airtel Africa and payment provider Network International in London. Recently the share prices of both Airtel and Jumia have been weak.

Reuters quotes one source familiar with the Helios deal: “It’s a really good business in a strong sector, telecoms in Africa is the sort of growth story that appeals in this low-growth environment (globally)”.

According to Kash Pandya, CEO of Helios Towers, in a report on website Total Telecom: “The Sub-Saharan Africa telecommunications market is and will continue to be one of the most exciting and high growth in the world. The underlying demographic and macro-economic trends are compelling: a young, growing and increasingly urbanized population whose demand for high-quality mobile voice and data services continues unabated, which is being further fuelled by expansion of 3G and 4G services and one day 5G services; and GDP growth that across our markets is expected to be 4.5%. per annum to 2024.”

Helios rents towers in 5 countries to telecommunications companies such as Airtel, MTN, Orange, Tigo and Vodacom. It has entered the competitive South African market, operates in Republic of Congo and Ghana, and is the only provider of towers in Democratic Republic of Congo and Tanzania. It reached earnings before interest, depreciation, taxes and amortization (EBIDTA) of $201m at the end of the second quarter of 2019, after 18 consecutive quarters of growth in adjusted EBIDTA.

It aims to raise $125m by issuing new shares in an initial public offer (IPO) and to use the money to expand, including into other fast-growing markets such as Senegal and Morocco and potentially into Angola and Ethiopia. The offer would also allow shareholders, including the International Finance Corporation and telecommunications firms Millicom and Bharti Airtel, to sell some of their shares.

Helios was founded in 2009 and is incorporated in Mauritius, although it will set up a holding company in London chaired by Ghanaian businessman Samuel Jonah.

Market conditions in 2018 caused both Helios and Eaton Towers, another telecoms company, to cancel plans to list internationally. Eaton Towers, slightly smaller than Helios Towers, was sold to American Tower in May in a deal which gave it an enterprise value of $1.85bn, according to the FT.

Investors back $ billions of African bonds

Interest in African sovereign debt has been climbing again in recent months. Angola has stil not issued a $1 billion – $2 billion benchmark bond due in May. However, Kenya, Nigeria and Mauritius and many other countries have flourishing debt markets and international interest is good in high-yielding hard-currency bonds such as those issued by the Republic of Congo and Cote d’Ivoire.
In April top bond broker Exotix (www.exotix.co.uk) gave a “buy” recommendation on the REPCON 2.5% bond, redeemable in 2029. Then it was trading at 57.0 and offered a yield of 10.8% and was the highest-performing African sovereign bond.
Trading in $2.4 billion of Cote d’Ivoire debt in US dollars trading under New York law (2.5%, redeemable in 2032) began in mid-April, after the country exchanged it for Brady bonds it had defaulted on nearly a decade ago. Exotix only rates it a “hold” at 64.2 in mid-April, when it yielded 9.6%. The bond was expected to make up 0.75% of the $400bn Emerging Market Bond Index (EMBI), according to a recent article in The Banker, and many were expected to buy it for this reason. Exotix commentary on the bond included detailed assessment of politics and economic developments including current account surpluses and International Monetary Fund assessments.
Governments in some countries are seeking to create longer-term yield curves for domestic investors, in order to provide a framework for longer-term finance and investment. For instance Barclays Kenya is offering 20-year mortgages, compared to a few years ago when the limit was 5 years. Bonds are also being moved into electronic trading and being handled by central depositories.
According to a report on 19 May on Bloomberg, Angola was awarded credit ratings of B+ by Standard &Poors and Fitch, 4 levels below investment grade, and Moody’s assigned an equivalent ranking of B1, putting Angola on par with Nigeria, Lebanon, Belarus and Ghana. The country plans to issue $1billion – $2 billion in bonds this year.
Other high-yield bonds, including in local currencies, can be found in Tanzania, Zambia, Ghana and Kenya. Economic commentators are encouraged, as debt can be a more cost effective way to fuel long-term economic growth than equity.
Better economic management and good investor interest in government debt has paved the way for more corporate bonds, including for power and telecommunications infrastructure. This site has already reported how Kengen and Nampower have issued bonds to fund urgently needed power expansion. Telecommunications giant Safaricom has also been successful.
The successes are tribute to the increasing quality of economic and fiscal management by African governments.