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Family Homes Funds Issues N10B Bond, Nigeria’s First Corporate Sukuk

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Family Homes Funds- Investors King

Family Homes Funds Limited has successfully completed Nigeria’s first Securities and Exchange Commission (SEC) registered corporate Sukuk.

The series 1 Ijara Lease Sukuk worths N10 billion and a 7-year 13 percent bond which will be due in 2028 (“Series I Sukuk”) under the company’s N30bn Sukuk Issuance Programme.

A Sukuk is an Islamic financial certificate, similar to a bond in Western finance, which complies with Islamic religious law commonly known as Sharia.

Since the traditional Western interest-paying bond structure is not permissible, the issuer of a Sukuk sells an investor group a certificate and then uses the proceeds to purchase an asset that the investor group has a direct partial ownership interest in. The issuer must also make a contractual promise to buy back the bond at a future date at par value.

The Series 1 Sukuk is the first-ever SEC-registered corporate Sukuk to be issued in Nigeria. It is also the first-ever corporate Sukuk certified by the Financial Regulation Advisory Council of Experts (FRACE) of the Central Bank of Nigeria.

The transaction also represents Family Homes’ debut in the Nigerian Debt Capital Markets.

The issuance was 2.1x oversubscribed, receiving significant interest from a wide range of high-value and quality investors including pension funds, ethical funds, fund managers, Islamic institutions, non-finance trustees, corporates, and high net worth individuals.

The net proceeds from this issue will finance up to 5,000 new homes for Nigerians on low income across this great nation, contributing to the FHF’s objective of developing up to 200,000 homes by December 2022.

“This is a landmark event in the unfolding history of a young organisation with a vision to transform the housing market by making safe decent housing accessible to the overwhelming proportion of our population, particularly those on a low income.

“It is worthy of note that about 64 percent of the subscription was from Pension Funds,” Femi Adewole, chief executive officer of Family Homes said at the historic signing ceremony in Abuja.

The Book Build process for the transaction was launched on June 25, 2021, and was completed on July 6, 2021.

Details received on the debut indicate the total value of orders received during the Book Build was N21.3 billion (representing a 2.1x oversubscription) of the intended N10 billion, despite current market dynamics and volatility.

Launched at a rental rate of 13 percent per annum, the transaction had tremendous support from the debt capital market.

“We are very proud of this landmark transaction, which is the first-ever certified corporate Sukuk issued in Nigeria. The domestic debt capital market has given us the opportunity to further diversify our funding sources and provided the necessary support for our goal of providing affordable homes across Nigeria.

The strong support for this transaction, given the challenging environment, is a reflection of the depth of the market, and investor confidence in Family Homes Fund’s long-term strategy and management team,” Adewole added.

The Series I Sukuk Issuance, according to him reinforces the Company’s commitment to facilitating the provision of affordable homes and diversifying its funding sources, as well as the resilience of the domestic debt capital market.

Family Homes will deploy the net proceeds to finance and develop affordable homes for low-income earners.

To date, Family Homes Funds has financed the development of at least 11,700 homes for low-Income earners across several states in Nigeria Including Delta, Ogun, Kano, Nasarawa, Kaduna, Yobe, Bauchi, Borno, Adamawa, and has created up to 64,000 direct and indirect jobs in the process.

But over the next 4years, specifically through its affordable housing projects, the company aims to invest up to N1.3trn (US$3bn) in the development of 500,000 homes for people on a low income. In the process, the Company also aims to create up to 1,500,000 jobs and enable homeownership through its creative products.

At the event, Suleiman Barau, chairman, Family Homes Fund said with the Sukuk issuance, FHF’s commitment to financing the development of affordable housing in Nigeria is further strengthened and presents a great source of hope for average Nigerians seeking a home of their own.

He said the FHF initiated this issuance as one of the measures towards attaining its strategic objective of bridging the housing gap in Nigeria, providing millions of jobs, and enabling economic growth.

“This is a unique opportunity, not just for Family Homes Funds, but for the entire housing market in Nigeria. We are confident that the success story of Family Homes Funds will spur greater interest and investment in the sector.

“The impressive rate of subscription and participation by a diverse range of investors demonstrates the high level of investor confidence in Family Homes Funds, particularly, because of the progress, it is making in the affordable housing space in Nigeria,” Barau, who is also a former deputy governor at the Central Bank of Nigeria stated.

“With a great sense of duty, we are confident of achieving a lot more within a short period,” he assured.

In her speech, Zainab Ahmed, minister of finance said the issuance is not only historic but will obviously strengthen Family Homes Funds’ dedication to its core principles and expand its ability to offer wider opportunities for millions of Nigerians who rely on them to realize their homeownership dreams.

“Sustainable funding is very critical for what Family Homes Funds do, and the interest that this Issuance has generated is very significant for what the future of funding in the housing sector may look like.

“The kind of results we are seeking can be hastened through efforts like this, where the private and public sectors can blend in through investments and other forms of partnership” noted Ahmed, who was represented at the event by Aliyu Ahmed, permanent secretary (Finance), Ministry of Finance, Budget and National Planning.

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Capital Market

Nigeria Leads Africa in Private Equity Deals, Records $2.59 Billion in Q1 2024

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Nigeria has emerged as the epicenter of private equity activity across Africa as $2.59 billion worth of deals were done in the first quarter of 2024.

This surge represents a 321.8% increase compared to the same period last year, indicating Nigeria’s robust potential amidst global economic shifts.

The data, analyzed by DealMakers Africa, a leading authority on mergers, acquisitions, and corporate finance in the continent, revealed Nigeria’s pivotal role in driving regional investment trends.

According to the report, this surge in private equity investments was predominantly fueled by strategic transactions in the energy sector and the burgeoning educational technology (edtech) industry.

Nigeria’s ascendancy in private equity deals marks a reversal from previous trends, where in Q1 2023, other African nations like Zimbabwe had momentarily surpassed it in mergers and acquisitions value.

This year, however, Nigeria not only reclaimed its leading position but also outpaced other significant economies in the region, with Zambia, Morocco, Kenya, and Egypt following with notable but comparatively lower investment figures.

Among the standout deals contributing to Nigeria’s stellar performance, Shell’s $2.4 billion divestment of its onshore oil and gas subsidiary to Renaissance Africa Energy stands as the largest transaction in the quarter.

This landmark deal not only bolstered Nigeria’s overall investment portfolio but also signaled continued interest and confidence from global investors in the country’s energy sector potential.

Commenting on the findings, analysts highlight Nigeria’s strategic advantages, including a sizable market, abundant natural resources, and a dynamic entrepreneurial ecosystem that continues to attract substantial foreign and domestic capital.

The report also emphasizes West Africa’s prominence in regional investments, with Nigeria at its core, recording a cumulative $2.6 billion in deal value across various sectors.

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Stanbic IBTC Holdings to Raise N550bn Through Debt Issuance, Rights Issue

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Stanbic IBTC - investorsking.com

Stanbic IBTC Holdings, one of Nigeria’s leading financial institutions, is set to raise a total of N550 billion through a combination of debt issuance and a rights issue.

This ambitious move comes amidst the backdrop of regulatory changes and the need for financial institutions to bolster their capital bases to meet new requirements set by the Central Bank of Nigeria (CBN).

The announcement was made in a notice of the company’s annual general meeting filed with the Nigerian Exchange Limited.

According to the disclosure, Stanbic IBTC Holdings plans to establish a debt issuance program with a capacity of up to N400 billion.

This program will enable the company to issue various forms of debt securities, including senior unsecured or secured, subordinated, convertible, preferred, equity-linked, or other forms of debt obligations.

Also, the board of Stanbic IBTC Holdings is seeking shareholder approval to raise additional equity capital of up to N150 billion through a rights issue or offer for subscription.

Shareholders will also vote on increasing the company’s issued and paid-up share capital to accommodate the proposed capital raise.

Stanbic IBTC Holdings has been a key player in Nigeria’s financial landscape, with a strong track record of performance and a diverse range of financial services.

The proposed capital raise is expected to provide the company with the necessary resources to pursue growth opportunities, enhance its market position, and continue delivering value to shareholders and stakeholders alike.

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Nigerian Breweries to Raise N600 Billion to Tackle Foreign Exchange Debt

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Nigerian Breweries - Investors King

Nigerian Breweries Plc, the largest brewery in Nigeria, has announced plans to N600 billion through a rights issue, with the primary objective of clearing its N500 billion foreign exchange debt burden.

This initiative was unveiled by Uaboi Agbebaku, the company’s secretary and legal director, during a pre-annual general meeting press conference held in Lagos.

Agbebaku stated that Nigerian Breweries is committed to implementing a comprehensive company-wide reorganization strategy to ensure a resilient and sustainable future for all stakeholders.

“The additional capital raised via rights issue will be utilized to settle all overdue foreign exchange debts and payables, effectively eliminating foreign exchange exposure,” Agbebaku explained.

He further highlighted the importance of strengthening the company’s balance sheet and liquidity position to restore profitability in the shortest possible time frame.

Hans Essaadi, the managing director and CEO of Nigerian Breweries, echoed Agbebaku’s sentiments, acknowledging the challenging operating environment characterized by factors such as double-digit inflation rates, currency devaluation, and foreign exchange challenges.

Essaadi emphasized the urgency of addressing these issues to mitigate their adverse impact on the company’s financial performance.

To achieve its objectives, Nigerian Breweries intends to leverage the support of its majority shareholder, Heineken Plc, which has committed to contributing over 50 percent of the N600 billion fundraising target.

This partnership underscores the strategic importance of the rights issue in revitalizing Nigerian Breweries’ financial health and positioning it for sustainable growth.

As part of its broader business restructuring efforts, Nigerian Breweries had previously announced plans to temporarily suspend operations at two of its nine breweries.

Sade Morgan, the director of corporate affairs at Nigerian Breweries, explained that the company is committed to executing its 2024 business recovery plan, which comprises cost management, operational optimization, and portfolio innovation.

“Our strategy for success in 2024 revolves around strong cost management, operational efficiency, and the introduction of exciting innovations to delight our customers,” Morgan stated.

“We remain dedicated to our employees, communities, and stakeholders as we navigate through these challenging times.”

With the proposed rights issue, Nigerian Breweries aims to not only alleviate its foreign exchange debt burden but also to fortify its financial resilience and drive sustainable growth in the dynamic Nigerian market.

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