CDC in €545m Algerian venture

CDC Capital Partners, the UK-based emerging markets investor, has completed a $26m mezzanine investment in Orascom Telecom Algeria as part of a €545m funding package for the business.

CDC Capital Partners, the emerging markets equity investment specialist backed by the UK government, is part of an investor syndicate putting equity and debt capital into Orascom Telecom Algeria (OTA), which dominates the country’s mobile market.

Under its first deal since completing a significant internal restructuring earlier this month, CDC has invested $26 million (€21 million) by way of a mezzanine loan as part of a €545 million ($674 million) debt and equity package underwritten by a cast of international investors. 
 
Alongside Credit Lyonnais, WestLB, COFACE, Hermes, Proparco and DEG, which contributed senior debt to the transaction, a number of undisclosed equity investors also contributed. Citibank Algeria advised on the deal.

OTA, which currently has 1.2 million subscribers and claims a near 90 percent share of the Algerian mobile market, will use the capital for licence payments and to expand its network.

Andrew Brown, based at CDC’s Cairo office, said the investment was representative of the firm’s approach to emerging market infrastructure projects with major capital requirements. “We believe improvements to communications infrastructure bring real benefits for emerging countries like Algeria,” he said. “An established communications infrastructure is vital for economic development.”

CDC has a mandate to channel private finance into some of the world’s poorest countries. Earlier this month announced the completion of a restructuring aimed at increasing its ability to stimulate private sector growth in emerging economies. CDC has over £1 billion (€1.4 billion; $1.8 billion) in assets. 

Under the restructuring, the group’s investment professionals and staff are spinning out to form Actis, a limited liability partnership in charge of managing CDC’s investments as well as up to $500 million of additional capital to be raised from third party institutions over the coming years.

CDC will retain its name and continue to operate as a wholly government-owned investment company, holding the existing and future assets of CDC and funds affiliated with the group.