The first corporate green bond in francophone West Africa was oversubscribed and CFA 10bn ($18.1m) was issued on 12 August in 8-year notes at a yield of 7.5%, 150 basis points less than the previous bank finance. The bond was issued Emergence Plaza, owner of retail complex Cosmos Yopougon, in Abidjan’s Youpougon municipality. The market welcome could spur further green bond issuance.
According to a press release, Africa so far accounts for less than 1% of more than $300bn of green bonds issued annually. Of the total $3.96bn of green debt issued to date in Africa, just $64mn was issued by non-financial companies prior to the Cosmos Yopougon deal, according to data compiled by the Climate Bonds Initiative. The previous 2 corporate green bonds were Acorn Holdings in Kenya and North South Power Company in Nigeria.
The $30m shopping centre, built on a 3 hectare site, opened in 2018 and in 2020 it was the first operational building in Francophone West and Central Africa to be awarded the Excellence in Design for Greater Efficiencies (EDGE) green building certificate by the World Bank Group’s International Finance Corporation—an initiative to encourage developers to design their buildings with resource efficiency in mind. EDGE’s monitoring software helps building managers reduce water and power consumption. Cosmos Yopougon cut its carbon emissions by 44% last year by using the EDGE system to optimise its energy use.
There are 60 tenants, including Carrefour, Burger King, Orange, MTN, Majestic Cinema, HA, Zino and Decathlon.
Cheick Sanankoua, co-Founder and Managing Partner of HC Capital Properties, which developed, financed, and manages Cosmos Yopougon, says: “Our experience shows that you can integrate climate initiatives, be cost efficient and ultimately deliver attractive returns for investors; it doesn’t necessarily cost more to be green. This has helped put green financing on the map in the region—if you build green you can get access to competitive financing, which is a language people understand. Hopefully that gets more people to start thinking about alternative ways to improve their projects by making them ecologically sound.”
Cosmos Yopougon’s ethos also focuses on social sustainability. The shopping mall is targeted at low-to-middle income consumers and, according to the press release, it is the most visited shopping centre in the region, with a record 397,360 monthly footfall in May 2021 and a very high occupancy rate of 93%. HC Capital Properties plans to issue further green bonds to finance the development of more retail complexes in Francophone West & Central Africa.
Local placement agent Hudson & CIE structured and arranged the bond sale, while French law firm Gide was the legal advisor on the deal. SFO Capital Partners, the lead global investor in the project, a London-based global real estate investment management firm following a hands-on approach to investing with a focus on entrepreneurial agility.
Kadi Fadika-Coulibaly, Managing Partner of Hudson & CIE, comments: “The development of this market is especially important in light of the UN’s recent climate change report, which underscores the need for issuers and investors to increase their focus on sustainability issues. At the same time, we also recognise the potential for green bonds to support more environmentally friendly real estate investment and development, so we believe this bond will pave the way for more issuance on that front as well.”
According to an article on Bloomberg, Hudson & Cie is advising on up to CFA 30bn of green debt, including financing for projects in Côte d’Ivoire. The sale in January 2021 of EUR 750m ($876m) of debt for the funding of green and social projects was oversubscribed almost 6x, Jean François Brou, CEO of Société Ouest Africaine de Gestion d’Actifs, told Bloomberg.