French private equity firm Wendel, together with its subsidiary Oranje-Nassau Développement, has announced an agreement with IHS Holding which will see Wendel acquire an interest of more than 25 percent in the business.
IHS provides telecommunications tower infrastructure to mobile network operators in Africa including MTN Group, Etisalat and Airtel. The firm – which has more than 1,000 employees and delivered $97.5 million turnover in 2011-12 – builds, leases and manages telecom towers on its own and on behalf of third parties. It is unlisted, though one of its subsidiaries – IHS Nigeria – is listed on the Nigerian Stock Exchange.
Wendel is investing $125 million alongside IHS’ current shareholders, which are development finance institutions and African private equity firms. They include Emerging Capital Partners, the International Finance Corporation, FMO and Investec Asset Management.
The transaction values the company at approximately 14 times EBITDA (earnings before interest, tax, depreciation and amortisation). Wendel will become the largest shareholder with more than 25 percent, while IHS management will hold around 10 percent. A statement from Wendel said that it “will exercise a substantial influence on the governance and on the strategic decisions of IHS Holding”.
Wendel says its investment will help support IHS’ pan-African growth strategy. IHS currently has around 5,700 towers under management, of which it owns 3,000. Most of these are in Nigeria, although it recently acquired 1,758 towers in Côte d’Ivoire and Cameroon from MTN Group. Wendel said the growth strategy would be supported by “future reinvestments to secure and accelerate…development”.
Wendel says the “very fast growth” of Africa provides “attractive expansion prospects to a long-term investor”. The African telecom industry is predicted to grow at around 10 percent annually over the coming years, the firm says. The region is also touted to see an increasing mobile penetration rate, which is currently among the lowest in the world at 62 percent of the total population.
Wendel, which is listed on Euronext Paris, holds a diversified portfolio of typically around 10 companies. Most are unlisted and normally receive around €200 to €500 million in equity investment.