Govts, Businesses Raise N4.6 Trillion from Capital Market in Five months

Nigerian governments and companies have raised some N4.6 trillion in new capital from the capital market so far this year, already more than 100 per cent above the total capital raising recorded for the whole of 2020.

Preliminary report at the weekend at the Nigerian Exchange (NGX) Limited indicated that the Exchange has facilitated more than N4.6 trillion so far this year. The capital raising cut across several asset classes including debts and equities and from several issuers including the Federal Government, state governments and companies.

The Federal Government has sustained the monthly issuance of its Federal Government of Nigeria Savings Bonds (FGNSBs) in addition to other intermittent debt issuances. The government, at the weekend, listed two tranches of savings bonds worth N700.5 million on the NGX. The savings bonds were issued in May.

A breakdown of the fund-raising entities showed five broad categories – Federal Government, state governments, quoted companies, fund management finds and special purpose vehicles (SPVs).

Also, a breakdown of the capital raising by issuers showed that the Federal Government accounted for the largest part of the new issues.

Other public sector issuers included Lagos State and Kogi State governments. Corporate issuers included BUA Cement, Fidelity Bank, Flour Mills of Nigeria, Transcorp Hotel and Sunu Assurances Plc.

The report also showed many maiden issues by companies, including debt issuances by Me cure Industries and Emzor Pharmaceuticals.

The latest report further illustrated that the capital market has continued to provide critical funding in debts and equities to governments and companies, after the market braced the COVID-19 lockdowns and disruptions in 2020 to pool more than N2 trillion funding.

Last year, issuers or fund-raising entities had included sovereign issuances by the Federal Government, sub-national issuances by the Ondo State Government, debts and equities raising by several quoted companies, including Dangote Cement, Flour Mills of Nigeria, Consolidated Hallmark Insurance, Coronation Insurance, formerly Wapic Insurance, International Breweries and Golden Guinea Breweries.

Other corporate issuers in 2020 included Abbey Mortgage Bank, C & I Leasing, UACN Property Development Company (UPDC), United Capital, AIICO Insurance, Red Star Express and Interswitch Africa One. Investment management companies such as ARM Investment Managers and Meristem Wealth Management also launched new collective investment schemes.

The market had, particularly, provided innovative finance through SPVs to support key infrastructural development and corporate restructuring. These included issuances such as Axxela Funding 1, LAPO MFB SPV, FBNQ MB Funding SPV and Primero BRT Securitisation SPV.

Despite the pandemic, the market has seen many landmark transactions since 2020, including maiden bond issue by Nigeria’s largest quoted company and Sub-Saharan Africa’s largest cement company, which floated a N100 billion bond, the largest single corporate bond issue in the capital market.

Also, International Breweries, the Nigerian subsidiary of Anheuser-Busch InBev (AB InBev), had in 2020 raised N164.39 billion through a rights issue, reported to be the largest right issue and a major indirect capital injection by a foreign investor in a Nigerian company.