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Wealth and Investment

Global partnership set to increase connectivity and boost economic growth

19 Mar 2019

Country
South Africa
Year
2019
Sector
Telecoms Media and Technology
Business Unit
Investment Banking
Specific Role
Financial Advisor
Standard Bank acted as Financial Advisor on a deal between SA fibre infrastructure and Internet Services Provider, MetroFibre Networx, and French investment company STOA Infra & Energy, in a transaction that will increase South African businesses’ and households’ access to open fibre.

MetroFibre Networx (Pty) Limited is an Independent Communications Authority of South Africa (ICASA) licensed open access fibre network operator and Internet Services Provider. MetroFibre provides a reliable fibre infrastructure network to enable a digital lifestyle and support successful businesses.

Established in 2010, MetroFibre started operations as a fibre connectivity provider to South African medium-to-large companies.  Over the last 3 years, MetroFibre has expanded its service offering to both residential and corporate customers in line with its strategic objective of being a diversified operator. MetroFibre’s growth plans include establishing a national network that will continue to focus on Fibre-To-The-Home (FTTH) and Fibre-To-The-Business (FTTB) customers.

In November 2017, MetroFibre’s shareholders and management embarked on a capital expenditure expansion drive which would see the company invest over ZAR2 billion in its core network, to enhance its FTTH and FTTB offering.

“This successful capital raise enables us to further expand our infrastructure and capabilities off an already strong base whilst growing rapidly to achieve mass-scale in a highly competitive and fast paced telecommunications sub-sector.”

                                                                              - Steve Booysen, CEO of MetroFibre

Standard Bank was instrumental in partnering MetroFibre with STOA.  Our view of the broader global funding ecosystem allowed us to recognise and leverage the natural synergy between the two companies.

An ideal partnership

STOA Infra & Energy is owned by Caisse des Dépôts (CDC) and Agence Française de Développement (AFD) with a capital base of EUR 600 million earmarked for investments in equity and quasi equity in developing and emerging countries, with a strong focus on Africa.

As an emerging market’s focused infrastructure investor, telecommunications is a core sector focus for STOA and South Africa is also one of STOA’s key targeted geographies.  This deal will see STOA acquire a significant minority equity investment of 23,08% in MetroFibre, with actual inward foreign direct investment deployed in the physical build and expansion of MetroFibre’s network in South Africa.

“Broadening our portfolio into the telecommunications sector is a natural step for STOA, whose objective is to foster socio-economic development in African countries and reduce digital bridge amongst others.”

                                                                             - Marie-Laure Mazaud, Deputy CEO of STOA

Standard Bank’s role the deal

Standard Bank acted as Financial Advisor to MetroFibre in the equity capital raise, adopting a two phased process with a significant amount of information shared in the early part of the process. This approach allowed the parties to quickly assess the opportunity and reach commercial consensus on value and shareholder alignment.

Our deep understanding of the telecommunications sector, our international footprint and our exceptional advisory capabilities enabled us to provide a bespoke solution to MetroFibre, balancing the requirements of incoming and existing shareholders to attract the right partner that shares the same values as MetroFibre’s management and shareholders.

“MetroFibre represents exactly the kind of emerging company, in the right sector, central to driving growth and inclusion in a digital age.”

                        - Nina Triantis, Global Head, Technology, Media and Telecom (TMT), Standard Bank

This transaction demonstrates Standard Bank’s ability to identify and link global capital to developing and medium businesses seeking to grow, not only large enterprises. It further emphasises our commitment to partnering with clients over the long term, combining our local knowledge, deep TMT insight and global reach to drive client growth in manner relevant to broader inclusion in a digital economy.

Supporting growth and expansion

Beyond creating a step change in MetroFibre’s business by supplying the capital for their next phase of growth, the FTTH segment will improve the quality of life of South Africans. Moreover, since a recent International Telecommunications Union report indicates that a 10% increase in connectivity results in 1% GDP growth, increasing South African businesses’ access to fibre will also drive efficiency and growth in the South Africa economy.

The investment is particularly significant for South Africa at this time, since the inward foreign direct investment directly supports President Ramaphosa’s campaign to raise sufficient Foreign Direct Investment to re-ignite growth and address unemployment in our country.

We have no doubt that the continued expansion of MetroFibre will contribute to South Africa’s economic growth, as well as to the rapid development of our country’s digital economy. Most importantly, this partnership will give more businesses and homes access to reliable internet infrastructure – further connecting Africa to the world.