Enhancing local content with United Capital’s lead role in N50b green bond
In the last three years, the quest to enthrone a regime of seamless financing and deepen corporate capital raising modalities has been evolving.
Even the Bankers Committee had recently agreed the use of Commercial Papers to raise funds for enterprises, real sector operators and projects in the assessed critical segments.
Currently, there several platforms at the nation’s capital market where organisations with viable propositions have ventured into fund raising. The emergence of the FMDQ OTC Securities and Exchange is one and has been abuzz with activities.
But it is also worth noting the ease at which the funds are not just mobilised, but the full participation of local investment bankers, who take up the responsibility hitherto, the exclusive preserve of foreign companies over years, as exemplified by United Capital Plc.
United Capital took up the lead role in mobilising N8.5 billion for an energy company, in Series 1 of the N50 billion debts programme. It is novel because venturing into green energy financing was not only nascent in the country, but the company opened its doors to increased participation in the sector.
The Series 1 Green Bonds was assigned AAA national scale rating by Agusto & Co. and GCR, having being guaranteed by Infrastructure Credit Guarantee Company Limited and certified by TUV NORD CERT, an approved verifier, under the Climates Bonds Standard, in conformance with the International Capital Market Association’s Green Bond Principles, Nigerian Federal Ministry of Environment’s Green Bond Guidelines, and the Green Bonds Issuance Rules of the Nigeria Securities and Exchange Commission.
For the renowned Investment Banking Group, the appointment as the lead issuing house and financial adviser of the first Corporate Green Infrastructure Bond in the country, by North South Power Company Limited (NSP), through its special purpose vehicle- SPV PowerCorp Plc, was not only a testimony to United Capital’s capacity to mobilise funds, but its readiness for bigger opportunities.
The Series 1 Green Bonds was oversubscribed by 60 per cent, with strong commitments from 12 institutional investors, including nine pension funds and priced at a 70 basis points spread to the comparable 15-year sovereign benchmark bond (FGN 2034) as at 04 February 2019. The success of the transaction highlights the growing appetite for more socially responsible investment in the market.
Besides, been marked Nigeria’s first Corporate Green Infrastructure Bond in the Nigerian Debt Capital Markets, the bond has a 15-year tenor, the longest tenured bond issued by a corporate.
The Managing Director, United Capital Investment Banking Division, Babatunde Obaniyi said the company is pleased to be involved in this monumental feat, which is the first to be carried out in the Nigeria Debt Capital Market. At United Capital, we are always exploring ways to provide innovative investment banking solutions to clients.
“As a major financial and investment services provider listed on the main board of the Nigerian Stock Exchange and a focus on pan-African, United Capital Plc is strategically positioned to play a leading role in helping African governments and corporates achieve their strategic objectives through a robust suite of financial and investment service offerings.”
The Executive Vice Chairman and Chief Executive Officer of NSP, Dr. Olubunmi Peters, noted that the bond issuance is a significant milestone in the Company’s long-term corporate strategy, demonstrating its market leadership, innovation and commitment to the highest standards of environmental, social and corporate governance.
“The completion of the Series 1 Guaranteed Green Infrastructure Bonds issuance, the company has established a long-envisioned link with a more sustainable long-term, local currency financing required to implement its ambitious strategic power generation expansion plan through the capital markets,” he said.
Following the receipt of Board’s approval on September 26, 2018, to raise additional capital and regulatory approval from the SEC, on December 31, 2018, NSP through its SPV- PowerCorp Plc issued N8.5 billion 15-year 15.60 per cent Series 1 Guaranteed Fixed Rate Senior Green Infrastructure Bonds due 2034, under a N50 billion Debt Issuance Programme.
NSP currently generates, on the average, eight per cent of Nigeria’s power providing electricity to millions of Nigerians.
Furthermore, NSP also aims to be the leading power company in sub-Saharan Africa by safely providing affordable, reliable, and sustainable power to its customer base. The medium-term objective of the Company is to contribute more than 10 per cent of Nigeria’s power generation output by 2020.
“NSP’s vision is to be a leading sustainable power company that safely provides reliable and sustainable energy. The Company seeks to do this by leveraging technology, expertise and knowledge to provide energy and infrastructure solutions required by its customers.
“The Company shares a passion to help meet the continent’s current and increasing energy needs, hence, providing communities and countries the opportunity for economic growth due to the availability of reliable and sustainable electricity,” Peters added.
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