Cordiant joins Ghanaian telco deal(4)

The Canadian fund manager has joined other investors, such as the Emerging Africa Infrastructure Fund, in extending a $160m loan to Ghanaian mobile telecoms business Zain.

IFC, the private sector lending arm of the World Bank Group, has provided a $90 million loan and mobilised an additional $70 million in loans from other lenders to expand mobile telecommunications in Ghana.

The loan to Zain Communications Ghana – the Ghanaian subsidiary of Middle Eastern telecom business Zain Group – will address the country’s growing demand for affordable communications services, the IFC said in a statement.

Under the IFC’s typical loan syndication structure, it will extend a loan to the borrower and then syndicates out a portion of that debt in the form of B-loans to third party investors, offering commercial banks and other financial institutions the chance to lend to IFC-financed projects that they might not otherwise consider. In this instance the B-loan offering was 30 percent over-subscribed, said the organisation.

Montreal-based Cordiant Capital, an emerging markets-focused fund manager, participated in the syndication alongside the Emerging Africa Infrastructure Fund, a $365 million debt fund backed European governments, international development finance institutions (DFIs) and commercial banks.

South African banking group FirstRand Bank and DFI the Netherlands Development Finance Company also joined the syndicate.

Ghana has experienced significant growth in the availability of telecommunications services, following the liberalisation of the sector and at 45 percent the mobile penetration rate is higher than in many other Sub-Saharan African countries, according to the IFC. There is, however, need for growth in the rural and semi-rural areas, where penetration rates are below 10 percent.

The telecoms sector has provided Sub-Saharan Africa with its poster-child of successful private equity investment: Celtel. In 2005, emerging markets-focused private equity firm Actis earned 5.5 times its money when the pan-African telephone network operator was sold to Kuwait-based mobile telecommunications provider MTC for $3.4 billion.