GuarantCo Provides $70M Bond Guarantee To CamGSM For Telecom Infrastructure Expansion In Cambodia

on Jan, 24 2024

GuarantCo, part of the Private Infrastructure Development Group (PIDG), has provided CamGSM (Cellcard) with a USD 70 million guarantee to support an internationally certified sustainability bond fully subscribed by institutional investors Manulife and Prudential Cambodia, listed at the Cambodian Stock Exchange on November 24, 2023, and financing from Deutsche Bank AG, Singapore Branch.

*GuarantCo Provides $70M Bond Guarantee To CamGSM For Telecom Infrastructure Expansion In Cambodia./Image credit: Cellcard.*

According to Guarantco press release the proceeds of the financing will be used towards the expansion of Cellcard’s telecom infrastructure. It added that both the bond and loan have obtained second party opinions from Moody's Investor Services on their Environmental, Social and Governance (ESG) alignment with the international standards.

All proceeds from the bond and loan will be allocated towards financing 4G telecommunication towers, energy efficient 4G equipment and future-proofing the network in preparation for 5G rollout. This transaction aims to enhance Cellcard's service quality for its customers including improved coverage, speed and increased data capacity supporting UN Sustainable Development Goal 9: Significantly increase access to information and communications technology.

This impact that the transaction will deliver to local people in Cambodia is significant; it is expected that over one million consumers will benefit from increased internet speed and coverage, improving their quality of life and productivity, whilst businesses will also benefit from enhanced productivity through improved speed and coverage of service.

In total around 260 jobs will be created: 200 jobs in construction for installers, riggers, engineers, surveyors, designers, network optimisers, network testers and drivers and 60 jobs for tower maintenance workers and back-office roles. The project will also make an important contribution to empowering women as 20 percent of Cellcard’s management and 30 percent of the workforce are women.

Layth Al-Falaki, CEO at GuarantCo, expressed his delight about closing their first telecommunication transaction in Asia and third transaction in Cambodia, which will benefit local people and businesses through improved quality of telecommunication services. Al-Falaki also highlighted that the Cellcard transaction marks GuarantCo's second deal with the Royal Group, following a USD $24 million bond guarantee for Royal Railway in December 2022.

“This is another good example of replicating transactions in the same market with the same strategic partners including Manulife and Prudential Cambodia with whom we have closed multiple transactions in Asia,” he said.

Al-Falaki added that GurantCo also closed their first transaction with Deutsche Bank as a beneficiary which provided 100 per cent funding for the loan tranche.

“Replicability is a key focus area for GuarantCo in order to close transactions faster and, in so doing, provide people in lower income countries across Africa and Asia with the much needed sustainable infrastructure,” he said.

Simon Perkins, CEO of CamGSM Plc said CamGSM’s sustainability bond and secured financing will support projects aiming to alleviate climate change related risks with investment in renewable energy and provide connectivity to the underserved population.

“The USD $70 million funds, as guaranteed by GuarantCo, will be allocated strategically, enhancing the network and infrastructure capabilities, as well as investing in environment-friendly products and initiatives aimed at serving the underserved communities,” Perkins said.

In congratulating this milestone, His Excellency SOU Socheat, Director General at the Securities and Exchange Regulator of Cambodia said GuarantCo has become a very important company that provides guarantees in the bond market in Cambodia which will strengthen both local and foreign investors’ confidence.

“The participation of GuarantCo in the journey of Cambodia securities market development will open up this market to welcome foreigners who aim to invest in the securities market in Cambodia,” he said. “I believe that GuarantCo will continue to support the development of the Cambodia securities market, especially to attract more foreign capital through the securities market and promote the economic development in the country."

You Kanhary, Acting Director of Listing & Disclosure Department at the Cambodia Securities Exchange said that As the only one securities exchange in Cambodia, CSX role is to expand financing options for Cambodian enterprises as well as to diversify the investment portfolios for public investors.

“We are delighted to see the sustainable growth of enterprises which play an important role in contributing to job creation, poverty reduction, environmental amelioration and economic development. The transition towards sustainability is a vital factor for individuals, institutions and the government to take it as the priority,” Kanhary said.

She added that it is in alignment with the “National Strategic Plan on Green Growth 2013-2030 issued by the Royal Government of Cambodia.

“We are striving to develop and achieve as a member of the Sustainable Stock Exchanges initiative which requires all related parties joining hands towards sustainable development goals”.

May Lin, Chief Financial Officer at Manulife Cambodia said Manulife Cambodia is pleased to be the main investors for the CamGSM sustainability bond guaranteed by GuarantCo that supports projects relating to digital connectivity, energy efficiency, and those that are aimed at alleviating climate change related risks.

“Such investments align with Manulife’s Impact Agenda, a framework that guides our efforts and decisions in building a business to better the world. We look forward to the bond to finance projects that will reap benefits for Cambodia both socially and environmentally," Lin said.

Freddie Wong, Chief Actuary at Prudential Cambodia, said the achievement of securing a USD 70 million bond guarantee by GuarantCo is a significant milestone and a testament to CamGSM’s strong standing in the industry and its commitment to advancing telecommunication infrastructure, and Prudential Cambodia emphasises its commitment to a sustainable, inclusive, and responsible future.

Wong said, “This underscores our steadfast belief in the power of collaboration and shared vision to embark on this journey to mobilise resources, drive meaningful impact, and demonstrates our unwavering dedication to building a resilient and sustainable Cambodia for generations to come. This investment is reflected in our ESG principles under one of the key strategic pillars of responsible investment which aims to enable a just and inclusive transition to net zero for every future.”

Seng Chan Thoeun, CEO at Royal Group Securities (RGS), highlighted that the issuance of the Kingdom's first-ever sustainability bond reaffirms RGS's dedication to improving Cambodia in both the financial and sustainable domains.

Thoeun stated, “Proven by this successful milestone, Royal Group Securities stays committed to raising more capital for our local businesses which generates a ripple effect on people’s livelihood. Leveraging our extensive network and expertise, we remain steadfast in the pursuit of our objectives, actively driving and championing the growth of the securities sector.”

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