Published: November 26, 2018
Another African corporate turns to the LSE – West Africa’s first local currency bond lists in Ghanaian cedi.
Quantum Terminals, an operator in Ghana's petroleum sector, listed a GHS45m (US$10mn) guaranteed corporate bond on the London Stock Exchange’s International Securities Market at the end of November. This is the first local currency corporate bond from Ghana or West Africa to list on the LSE.
The 10-year corporate bond is being used to support operations at the company’s liquefied petroleum gas (LPG) business in the African country. It is the first tranche of a larger GHS140m bond programme by the company.
Speaking to EMEA Finance, Emmanuel Egyei-Mensah, Executive Director of Quantum Terminals, said proceeds from the bond that was originally raised on the Ghana Fixed Income Market in May were being used a fund a new LPG terminal in Tema in eastern Ghana.
He said the next round of bond financing would be used to invest in a new distribution system to enable Ghanaians to refill LPG cylinders for domestic use. “The next bond that we do will be for the distribution side.”
The bond has a 75% partial credit guarantee from GuarantCo, GuarantCo, the guarantee arm of the Private Infrastructure Development Group, which mobilises private sector local currency investment for infrastructure projects and supports the development of financial markets in lower income countries across Africa and Asia.
Lasitha Perera, CEO of GuarantCo, told EMEA Finance it was keen to support Egyei-Mensah’s vision for revolutionising LPG use in Ghana by building a new terminal and establishing the distribution system.
“This will help households in Ghana switch from burning charcoal, which has a lot of bad health effects, to gas,” he said. “Emmanuel is a pioneer and a pathfinder in many ways and we were happy to help and support him.”
Quantum Terminals helps to increase the uptake of LPG for domestic use, substituting coal and wood, the resultant fumes of which when used in cooking, have detrimental health impacts on residents.
There are also environmental benefits. EU funded research suggests LPG is one of the cleanest thermal fuels available in terms of CO2 emissions, which on average in industrial use generate 15% less CO2 per kilowatt hour than oil and 50% less than coal.
Egyei-Mensah said a listing in London gave Quantum access to the UK financial centre’s deep pool of capital and wide investor base. “We are growing and so want access to a bigger pool of investors,” he said. “The London listing of the bond will signal a new beginning for corporates accessing capital markets in Ghana.”