DEALS

The Value of Relationships
in Building Africa’s Future

Hasnen Varawalla Author

Hasnen Varawalla

Managing Director, Co-Head of
Investment Banking Origination

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The Investment Banking team has built on its excellent relationship with African telecoms giant IHS to deliver a complex, multibillion-rand deal

Good work leads to more work. It’s an age-old business truth, and one that Absa CIB is demonstrating in its work with multinational telecommunications giant IHS Holding Limited (NYSE: IHS) (“IHS”). The bank’s latest transactions for IHS highlight the value of excellent bank-client relationships, while providing a showcase for the CIB team’s depth of expertise in the African technology, media and telecom (TMT) sector.

IHS has concluded the acquisition, sale and leaseback of 5,701 telecommunication towers from MTN in South Africa.  IHS will also provide Power Management Services to MTN SA on approximately 13,000 sites, including the acquisition portfolio, across the country.  The deal size of R11bn comprises a cash consideration of R6.4bn and estimated R4.6bn of IFRS 16 lease liabilities.

“Absa is privileged to have played a key role in IHS’ entry into South Africa and to becoming the largest independent tower operator in the country.  We were able to deliver a comprehensive range of M&A Advisory and Debt services to IHS to assist its growth trajectory.  This deal follows on from our role as an African bookrunner on IHS’ $378mn New York Stock Exchange IPO and $1bn Eurobond in 2021.,” says Hasnen Varawalla, Co-head of Investment Banking Origination at Absa.

“It is all about combining domain expertise, product capability and a deep desire to build multi-product, multi-year client relationships,“ Hasnen adds.

Building a multi-product relationship

As the joint M&A advisor, mandated lead arranger and the co-ordinator bank, the buck stopped with Absa CIB. “We’ve built a robust relationship with IHS, so we consider ourselves as their trusted advisor” explains Chetan Jeeva, Absa’s Head of SA Debt. The collaboration between the M&A and Debt teams allowed for the delivery of a seamless service, allowing the Investment Banking franchise to demonstrate its collective understanding of the TMT sector in general, and of the Towerco Asset Model in particular. “That business model is underpinned by IHS’s long-term contractual cash flows with blue chip tenants. The growth potential of these assets is linked to co-location of additional tenants to create operational leverage as well as new tower builds based on additional demand” Chetan adds.

Expertise in the TMT sector

The IHS deal comes at a busy time for Absa’s CIB teams. In 2021 alone, the bank was involved as the mandated lead arranger in 18 high-profile deals, with a combined value of $3.1 billion. Absa in recent years has also completed deals involving the telecom center including for Airtel Africa, 9mobile and Vodacom.

As Jeeva points out, many of the Debt team’s biggest recent deals have been in the TMT sector. MultiChoice’s 2021 acquisition of an increased stake in Pan-African digital entertainment platform KingMakers – enabled by Absa as the mandated lead arranger, facility agent and original lender through a R4 billion syndicated term loan facility – was just one highlight.

“Access to network connectivity and broadband services is a key objective on the African continent as it enters the fourth industrial revolution, underscored by digital integration being an essential driver” he says. The IHS transaction only underscores his point.

Contact Hasnen Varawalla and Chetan Jeeva to find out more.

The bravery to imagine and the will to get things done. That’s Africanacity.

Hasnen Varawalla Author
Hasnen Varawalla

Managing Director, Co-Head of Investment Banking Origination

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