FSDH Capital Limited, the FSDH Group’s investment banking and securities trading subsidiary, demonstrated its capital raising capabilities by leading the successful financial close of the 46 billion (US$110.7 million) Series 1 Fixed Rate Senior Unsecured Bond Issuance in Nigeria’s capital market as part of Shelter Afrique’s $200 billion (US$481.3 million) bond issuance program.
African governments founded Shelter Afrique, a pan-African development financing agency committed solely to delivering cheap and adequate housing finance across Africa, to meet the demand for a sustainable housing delivery system and related infrastructure projects in Africa. 44 African countries, the African Development Bank, the African Re-Insurance Corporation, and Fonds de Solidarité Africain are among its shareholders (FSA).
Shelter Afrique was able to exercise the ‘green shoe’ option and raise an additional $6 billion (US$14.4 million) over the original $40 billion plan (US$96.3 million) because the dual tranche bond issuance was 60.7 percent oversubscribed, with the order book peaking at 64.3 billion (US$154.6 million).
FDSH Capital served as the Lead Issuing House for the bond issuance and was instrumental in ensuring a smooth financial close. ARM Securities Limited, FCMB Capital Markets Limited, and United Capital PLC served as joint issuing houses for the bond issuance. Aluko & Oyebode and Banwo & Ighodalo, who acted as Solicitors to the Issue/Issuer and Solicitors to the Trustee, respectively, and United Capital Trustees Limited and CardinalStone Registrars Limited, who acted as Trustee and Registrar, respectively.
FSDH Merchant Bank Limited, Stanbic IBTC PLC, and United Bank for Africa PLC are among the Receiving Banks.
Mr. Tolu Osinibi, Managing Director of FSDH Capital Limited, commented regarding the transaction:
“FSDH Capital is delighted to have assisted Shelter Afrique with its successful debut bond issue in Nigeria’s capital market.” The success of the bond issue will encourage other supranational financial institutions to use Nigeria’s debt capital market for their Naira funding needs. We appreciate the investment community’s support for the bond issuance. We particularly appreciate Shelter Afrique’s Board of Directors and Management for entrusting us with such a significant transaction, as well as their commitment and attention throughout the process.”
Shelter Afrique’s Acting Managing Director, Kingsley Muwowo, announced the result during a signing event in Lagos, Nigeria.
“This is Shelter Afrique’s first foray into the Nigerian debt capital market, and the good response demonstrates investor confidence in our long-term value offer for the Nigerian housing market.” We want to reassure our investors that the proceeds of the bond issue will be put to good use, ensuring that greater value is created for them.”
The issuance of the Naira-denominated bonds, he added, underlines the organization’s intention to focus on tailor-made, long-term financial solutions for the provision of cheap and appropriate housing in Nigeria and across Africa.
The 5-year Tranche A bonds have a yield of 13.00 percent, while the 7-year Tranche B bonds have a yield of 13.25 percent. The bond sale drew interest from a wide spectrum of institutional investors, including pension funds, banks, and insurance companies, thanks to an AA rating from GCR Ratings and an A+ rating from Agusto & Co. The bonds’ tenors correspond to the institution’s long-term housing finance strategy and ambitions in Nigeria. The revenues from the bond will be used by Shelter Afrique to fund mass housing development by tier 1 real estate developers as well as provide lines of credit.
This is the first Naira-denominated bond offering by a supranational organization in over nine years, and the over-subscription demonstrates strong investor interest in Nigeria’s capital martket.
