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Standard Chartered Commits USD 200m Facility With Afreximbank for African Union COVID-19 Vaccination Acquisition Programme

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Afreximbank - Investors King

African Export-Import Bank (Afreximbank) and Standard Chartered today announced an agreement for Standard Chartered to provide USD 200m of not-for-profit funding towards Afreximbank’s structured framework to help finance the acquisition of COVID-19 vaccines for African nations.

The collaboration between Standard Chartered and Afreximbank will help ensure that 55 countries across Africa have access to COVID-19 vaccines. This facility will play a part in ensuring that Africa can achieve its COVID-19 strategy, which targets vaccinating a minimum of 60 per cent of Africa’s population.

This facility is part of the Advance Procurement Commitment (APC) framework structured by Afreximbank in collaboration with the African Vaccines Acquisition Task Team (AVATT), under which Afreximbank provided a guarantee of USD 2bn to vaccine manufacturers to secure access to COVID-19 vaccines for African countries.

Over the last year, Afreximbank has also launched a number of facilities to support its Member Countries. These include the Pandemic Trade Impact Mitigation facility (PATIMFA), under which the Bank has disbursed over USD 6.5bn to mitigate and manage the financial, economic and health impacts of the pandemic. In addition, Afreximbank put in place a USD 1.5bn Collaborative Covid-19 Pandemic Response Facility (COPREFA), working with partners to support African economies during the pandemic.

The funding is part of the Standard Chartered’s USD 1bn financing commitment that was launched in March 2020, which aims to tackle the pandemic by financing vital equipment such as personal protective equipment, ventilators and now vaccines. To date, USD 900m of this have been allocated and over USD 700m disbursed to clients.

Prof. Benedict Oramah, President of Afreximbank, said: “We are delighted that Standard Chartered has committed USD 200m to support the ongoing work of Afreximbank and AVATT in helping African countries secure access to COVID-19 vaccines. Having an effective financing solution for vaccine procurement in place for Africa is of paramount importance to ensure we are not left further behind in the ongoing race. This agreement demonstrates the unwavering commitment of Afreximbank and Standard Chartered to helping Africa overcome the challenges of the pandemic.”

Simon Cooper, Chief Executive, Corporate, Commercial, and Institutional Banking at Standard Chartered, said: “The speed of vaccine rollout is not only a healthcare issue but is increasingly a differentiator of near-term, post pandemic economic recovery for African nations. We are acutely aware that Africa accounts for under 2 per cent of vaccines administered worldwide; we welcome Afreximbank’s efforts to tackle this and we want to use our USD 1bn facility to help.”

Using financing provided by Standard Chartered, Afreximbank is helping to ensure Africa’s access to COVID-19 vaccines by ensuring payment to identified vaccine manufacturers that have vaccine orders placed by African nations through the African Medical Supplies Platform.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Insurance

Sanlam to Acquire 60% Stake in MultiChoice’s Insurance Arm for R1.2bn

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South African insurance giant Sanlam Limited has announced plans to acquire a 60% stake in NMS Insurance Services (NMSIS), the insurance subsidiary of pay TV operator MultiChoice Group, for R1.2 billion.

This strategic acquisition aims to enhance Sanlam’s footprint in the African insurance market and leverage MultiChoice’s extensive subscriber base across the continent.

In a joint statement released on Tuesday, both companies revealed that the deal includes a long-term commercial arrangement designed to expand insurance and related financial services to MultiChoice’s diverse audience.

The transaction also features a performance-based cash earn-out potential of up to R1.5 billion, contingent upon the gross written premium generated by NMSIS by the end of 2026.

Paul Hanratty, CEO of Sanlam Group, expressed optimism about the acquisition, stating, “This partnership provides a unique opportunity to combine our market presence and technological capabilities, fostering growth and market penetration while creating synergies beneficial to all stakeholders.”

Calvo Mawela, CEO of MultiChoice, highlighted the strategic significance of the collaboration, noting, “This deal not only enhances the value we provide to our subscribers but also taps into Sanlam’s expertise to drive innovation and growth in our insurance offerings across Africa. It’s a testament to the hard work and dedication of our teams.”

NMSIS has shown impressive growth, with gross written premiums increasing by 36% year-on-year and profit after tax rising by 51% in the first quarter of 2024.

MultiChoice plans to use the proceeds from the sale for working capital while retaining a 40% interest in NMSIS.

The move comes as MultiChoice faces economic challenges, including a 13% drop in subscribers in key markets such as Nigeria, Angola, Kenya, and Zambia due to economic hardships and currency devaluations.

Despite these setbacks, the partnership with Sanlam is seen as a strategic step to bolster its financial services offerings and stabilize revenue streams.

The announcement also follows recent regulatory developments, with MultiChoice entering a Cooperation Agreement with Groupe Canal+ SA after Canal+ acquired a 45.20% stake in MultiChoice, necessitating a mandatory offer under South African takeover regulations.

As the African insurance market continues to grow, Sanlam’s acquisition of a significant stake in NMSIS positions both companies to capitalize on emerging opportunities, providing innovative insurance solutions to millions of customers across the continent.

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Finance

GTBank Takes 60 Bank Executives to Court Over N17bn Loan Dispute

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Guaranty Trust Bank (GTBank) has initiated legal proceedings against 60 top executives from 13 commercial banks in Nigeria.

The action stems from an ongoing dispute involving a N17 billion Anchor Borrowers Programme loan granted to AFEX Commodity Exchange.

The executives, including chairmen, chief executive officers, directors, and company secretaries, are facing contempt of court charges for allegedly failing to enforce a No-Debit-Order on AFEX Commodity Exchange’s accounts. The legal battle, which has drawn significant attention in the financial sector, is being closely monitored by industry stakeholders.

Details of the Case

The Federal High Court in Lagos, presided over by Justice CJ Aneke, signed an order to hold the executives accountable for disobeying its ruling dated May 27, 2024.

The court’s decision mandates the executives, including those from prominent banks such as Access Bank, Citibank, Jaiz Bank, Union Bank, Fidelity Bank, and First Bank of Nigeria Plc, to comply with the directive or face jail time.

The case, registered as FHC/L/CS/911/2024, involves GTBank and AFEX Commodity Exchange. The court had previously ordered 20 banks to transfer funds from AFEX’s accounts to GTBank until the outstanding N17.81 billion loan is repaid.

This sum includes the principal amount of N15.77 billion and additional recovery costs and expenses totaling N2.04 billion.

Contempt Proceedings

The legal notice, titled ‘Order to Serve Notice of Disobedience to Order of Court via Newspaper Publication,’ was published in national dailies, signaling the gravity of the situation.

The notice serves as a warning to the bank executives about the consequences of failing to adhere to the court’s order.

In addition to the commercial banks, the Nigerian Deposit Insurance Corporation (NDIC), acting as the liquidator for Heritage Bank, has also been cited for contempt.

The matter is set for further hearing next Thursday, where the court will decide the fate of the implicated executives.

Background and Implications

The dispute originates from a loan facility extended to AFEX Commodity Exchange under the Central Bank of Nigeria’s (CBN) Anchor Borrowers Programme.

The loan was intended to finance smallholder farmers, with repayment expected through the sale of agricultural produce. However, AFEX reportedly defaulted on the loan, prompting GTBank to seek legal recourse.

AFEX has countered by stating that it has repaid 90% of the loan and is in ongoing discussions with the CBN regarding the remaining balance. The commodities exchange has cited economic challenges and macroeconomic policies, such as the naira redesign, which adversely affected the farmers’ ability to repay the loans.

The court has also permitted GTBank to take control of AFEX’s 16 warehouses across seven states, allowing the bank to sell the stored commodities to recover the outstanding loan.

Industry Reaction

The case has sparked concerns about the efficiency and integrity of Nigeria’s banking and financial sectors.

Charles Akinbobola, a senior energy analyst at Sofidam Capital, said, “The challenge of the power sector has not entirely been the scarcity of funds. Several trillions of naira have been pumped into that industry. The sector has been plagued by the shortcomings of its managers.”

Experts like Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise, emphasize the need for addressing fundamental issues in the electricity value chain, such as technical and commercial losses, which continue to burden consumers with inefficiency costs.

As the legal proceedings unfold, the financial community will be watching closely to see how this high-stakes battle impacts the involved parties and the broader financial sector in Nigeria.

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Banking Sector

Guaranty Trust Holding Plans N500 Billion Share Offering

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Guaranty Trust Holding Company Plc (GTCOPLC) has announced plans to raise up to N500 billion through a new share offering, according to a preliminary prospectus filed with the Securities and Exchange Commission (SEC).

This move aims to support the company’s ambitious growth and expansion strategy.

GTCOPLC’s proposed offering will involve the subscription of ordinary shares of 50 kobo each, although the exact number of shares and the price range are yet to be determined.

The offering includes a concurrent filing of a preliminary universal shelf registration statement, allowing the company to issue various types of securities, potentially raising up to $750 million in multiple currencies.

Purpose of the Offering

The funds raised from this offering will primarily be allocated towards:

  1. Business Growth and Expansion: GTCOPLC plans to invest significantly in technology infrastructure to enhance its current operations. Additionally, the company intends to establish new subsidiaries and make selective acquisitions of non-banking businesses.
  2. Recapitalization of Guaranty Trust Bank Limited: Part of the proceeds will be used to strengthen the capital base of its banking subsidiary.

Target Investors and Structure

The offering is structured to attract both institutional and retail investors. It will be divided into two main tranches:

  • Nigerian Tranche: An institutional and retail offering aimed at eligible investors within Nigeria.
  • International Tranche: A private placement targeting qualified institutional buyers outside Nigeria.

Listing and Trading

GTCOPLC has also filed an application with the Nigerian Exchange Limited (NGX) to list and admit the new ordinary shares for trading on the NGX Official List.

The company anticipates opening the offering by July 2024.

Financial Strategy

The universal shelf registration will enable GTCOPLC to issue a variety of securities over time, with a total value of up to $750 million (or its equivalent in Nigerian Naira).

This approach provides the company with flexibility to raise capital in different markets during the programme’s validity period. The current proposed offering will be the first issuance under this new programme.

Regulatory Compliance

GTCOPLC emphasized that this notice does not constitute an offer of securities for sale in the United States or to U.S. persons, as defined under Regulation S of the U.S. Securities Act of 1933.

The offered shares have not been, and will not be, registered under the U.S. Securities Act or any state securities laws, and cannot be sold in the United States without proper registration or an applicable exemption.

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