FSDH Capital leads Shelter Afrique’s N46bn Bond issuance
FSDH Capital Limited, the investment banking and securities trading subsidiary of FSDH Group, has demonstrated its capital raising credentials by leading the successful financial close of the N46 billion (US$110.7 million) Series 1 Fixed Rate Senior Unsecured Bond Issuance in Nigeria’s capital market under the N200 billion (US$481.3 million) bond issuance programme for Shelter Afrique.
Shelter Afrique, the pan-African development finance institution exclusively dedicated to providing affordable and adequate housing finance across Africa was established by African governments to address the need for a sustainable housing delivery system and related infrastructure projects in Africa. Its shareholders include 44 African countries, the African Development Bank, the African Reinsurance Corporation, and Fonds de Solidarité Africain (FSA).
The dual-tranche bond issuance was 60.7 percent oversubscribed with the order book peaking at N64.3 billion (US$154.6 million), enabling Shelter Afrique to exercise the ‘green shoe’ option and raise an additional N6 billion (US$14.4 million) more than the original N40 billion plan (US$96.3 million).
FDSH Capital acted as the Lead Issuing House and played a critical role in ensuring that the transaction achieved successful financial close while ARM Securities Limited, FCMB Capital Markets Limited and United Capital PLC acted as joint issuing houses to the bond issuance. Other professional parties include Aluko & Oyebode and Banwo & Ighodalo who acted as Solicitors to the Issue/Issuer and Solicitors to the Trustee respectively, United Capital Trustees Limited and CardinalStone Registrars Limited acted as the Trustee and Registrar respectively. The Receiving Banks include FSDH Merchant Bank Limited, Stanbic IBTC PLC and United Bank for Africa PLC.
Speaking about the transaction, Tolu Osinibi, managing director of FSDH Capital Limited, said, “FSDH Capital is pleased to have advised Shelter Afrique on its successful debut bond issuance in Nigeria’s capital market. Shelter Afrique continues to play a pivotal role in housing development across Africa and the success of the bond issuance will encourage other supranational financial institutions to tap Nigeria’s debt capital market for their Naira funding needs. We thank the investor community for their support on the bond issuance. We also thank the Board and management of Shelter Afrique for trusting us with this milestone transaction, and their commitment and dedication throughout the process.”
Announcing the result during the signing ceremony held in Lagos, Kingsley Muwowo, Shelter Afrique’s acting managing director, said, “This is the first time Shelter Afrique is tapping the Nigerian debt capital market and the positive market reception is a clear indication of investor confidence in our long-term value proposition for the Nigerian housing market. We would like to assure our investors that we shall put the proceeds of the bond issue into good use that will ensure that more value is created for them.”
He also noted that the issuance of the Naira-denominated bonds reflects the organisation’s desire to focus on tailor-made, long-term funding solutions for the provision of affordable and adequate housing in Nigeria and across Africa.
The 5-year Tranche A bonds priced at 13.00 percent and the 7-year Tranche B bonds priced at 13.25 percent. On the back of an AA rating from GCR Ratings and an A+ rating from Agusto & Co, the bond issuance attracted participation from a diverse range of institutional investors, including pension funds, banks, and insurance companies. The tenors of the bonds are aligned with the institution’s housing finance strategy and long-term plans in Nigeria. Shelter Afrique will use the bond proceeds to fund mass housing development by tier 1 real estate developers, and to provide lines of credit.
It is noteworthy that this is the first Naira-denominated bond issuance by a supranational organization in over 9 years and the over-subscription clearly reflects strong investor appetite in Nigeria’s capital market.