As the global economic downturn threatens to dry up financing for companies across the developing world, IFC is stepping up efforts to strengthen capital markets and ensure that private businesses have access to the financing they need to thrive.
In Burkina Faso, IFC is supporting the country’s first initial public offering, attracting private investment to the country and helping develop West Africa’s capital markets.
IFC will purchase up to a five percent stake in Onatel, Burkina Faso’s incumbent telecom operator, during its current public share offering, which will remain open until the end of January.
By participating in the first share offering by a Burkinabe company, IFC aims to attract investors and set standards to deepen the country’s equity markets so that private businesses can have better access to capital.
IFC’s participation in the IPO is also designed to not displace any private investors. IFC will initially only buy shares not subscribed to in the offering. If all shares are sold, the government of Burkina Faso will sell IFC an additional three percent stake in Onatel at the offering price.
Bond in West African Francs
It’s not the first time IFC has brought its expertise to galvanize Burkina Faso’s nascent capital markets. In late 2006 IFC became the first nonresident institution to issue a bond denominated in West African francs, the currency of Burkina Faso and seven neighboring countries, to help develop the region’s local currency bond market.
The Onatel IPO is the second stage in strengthening West Africa’s capital markets so that private businesses have more options for funds.
For Burkina Faso, the impact of the transaction goes far beyond the capital markets. With fixed line telephone penetration of less than one percent and mobile penetration under five percent, the country has one of the lowest telephone penetration rates anywhere in the world.
Onatel will use the funds from the share offering, together with a €7.5 million loan IFC made to the company in 2007, to upgrade its fixed and mobile networks and increase connectivity. That will help link up more of Burkina Faso to the global telecommunications and information network.
“IFC is committed to supporting an improved telecommunications infrastructure in Burkina Faso due to the enormous overall development impact it can encourage,” said Yolande Duhem, IFC Director for Western and Central Africa.
Onatel is already a leader in attracting foreign cash to Burkina Faso. When in 2006 the country’s government began privatizing the formerly state-owned company, it sold a 51 percent stake to Morocco’s Itissalat Al-Maghrib, or Maroc Telecom.
The standards Onatel sets with its IPO are sure to open doors for other local companies looking to raise funds and attract even more international funds to shore up the country’s growing economy.
For more information contact:
Houtan Bassiri
Communications Officer
Johannesburg, South Africa
Tel: +27 11 731 3179
Email: hbassiri@ifc.org
