IHS raises US$490mn for expansion

IHS raises US$490mn for expansion

Published: March 4, 2014

African telecoms infrastructure company welcomes new investors including Goldman Sachs and IFC fund.

IHS Towers, which builds telecoms infrastructure in Africa, has raised US$490mn in debt and equity from new and existing investors.

The 12-year-old company has now secured more than US$1.5bn in expansion capital during the past 12 months. Last year it raised US$1.035bn from parties including private-equity firm Emerging Capital Partners, French investment firm Wendel and Africa’s Ecobank to finance its acquisition of 1,758 telecoms towers in Côte d’Ivoire and Cameroon from MTN.

Alongside existing backers, new investors to join the latest funding round were Goldman Sachs, the IFC’s Global Infrastructure Fund and African Infrastructure Investment Managers.

The money will be used to fund acquisitions and build new towers. IHS already owns and manages more than 10,500 towers and has built some 3,500 in Nigeria, Cameroon and Côte D’Ivoire. Rhys Phillip, chief commercial officer of IHS, tells EMEA Finance that the company constructed about 850 towers during the past 10 months and that he expects that pace of expansion to continue.

Furthermore, in December IHS agreed to buy MTN’s portfolio in Zambia and Rwanda, totalling 1,228 towers. As with the deals in Côte d’Ivoire and Cameroon, the company will operate the assets and build any new towers MTN requires in those countries.

With that kind of opportunity ahead, Rhys has few concerns that the company’s investors will lose their appetite for the emerging markets and, specifically, Africa.

“There will always be people willing to put money into the right investment with the right management team,” he says. “At IHS we have a management team that has been there and done it, and has proved that it can take investors’ money and grow it successfully over recent years.

“We’re in Africa where the growth rates are significantly above those of more developed countries. Our biggest operation is Nigeria, one of the top 10 economies in the world. The contracts that underpin our revenue are long term. There are two or three mobile operators per country and four or five major ones in the whole of Africa, so we don’t have a lot of customers but they’re all investment grade. The combination of those factors means that IHS is a good bet and that’s why we can attract high-quality investors.”