Akin Oni heads the Trust Services and Legal Department of STL Trustees Limited. He is an astute trust professional with an exceptional flair for securitisation, project finance, and structuring transactions. In this interview, he provides deep insights into the instruments of trust and how they can be used to build a safe and secure economy.
The theme of this years’ Nigeria Economic Summit is ‘Building Partnership for Resilience’. For the sake of our readers, can you explain to us what trust is and how corporate trustees can help strengthen partnerships for resilience?
A trust is a legal arrangement where a person or company (the Trustees) holds assets (property) in trust on behalf of the owner for the benefit of others (the beneficiaries).
Trustees help to build confidence in business transactions. In any debt finance transaction in which two or more banks and/or other providers of finance or guarantees come together to provide funding for a single entity with all desiring security for their exposures, structuring a security arrangement to cover these multiple funding exposures is best achieved through a security trustee who holds the assets of the entity as security on behalf of the lenders and acts as an independent party overseeing the interests of the
different lenders and the borrower.
From the foregoing, rather than have the borrower create different securities in favour of different banks, the trustee plays the all-important role of holding such securities in trust on behalf of all the lenders to be shared on a parri-passu basis and ensures that the interest of all parties is equally protected under a water-tight trust arrangement. This structure prevents the undue technicalities predominant when a transaction involves several financial institutions.
In the area of corporate trust, STL Trustees act as trustees to some corporate bonds and notes to ensure that the interests of the investors are well protected. We also act as trustees in mutual fund transactions to protect the interests of the unitholders. Our major role is to make sure that issuers and fund managers keep to the terms of their transactions, thereby strengthening the relationship that exists between investors, issuers, and fund managers. This builds confidence and helps more investors to invest in our economy.
Your company, STL Trustees, is a pioneer in the area of application of trust instruments in real estate transactions. How does this work?
Trusts are not new to the real estate scene and have been in place for many centuries. In the real sense of it, the trust started with the real estate sector.
In this generation, the use of trust in real estate is multi-dimensional. Trust is used as a tool to protect title to real estate either for the purposes of transferring assets to the next generation or retaining assets in the lineage.
It is also used by landowners in joint venture arrangements (JVAs) with other parties such as developers and financiers to enhance or augment the assets without losing the title. This gives comfort to everybody on the transaction and also helps to ensure that all the parties to the transactions play their roles as expected under the agreement entered into by the parties.
It can even be a family property that the beneficiaries do not have the fund to develop. Instead of just allowing the property to continue to lie fallow, we encourage them to go into a joint venture agreement with a financier while a trustee holds the property documents in trust for all the parties involved.
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It is also used in transferring assets to buyers. For example, a buyer may be allowed to meet the payment terms in installments, and the owner of the property may not be comfortable releasing the title document until the completion of payments. In the same vein, the buyer may not be comfortable parting with consideration when the title still resides in the owner of the property. In this situation, both parties engage the services of a trustee to hold the title documents in trust on behalf of both parties until the final payment is made.
At the end of the day, it is a win-win situation for the parties involved.
To fully comprehend the benefits and nuances related to a real estate trust, I advise that you visit a corporate trustee who has the experience and expertise in real estate and general trust administration.
STL Trustees Limited has achieved many firsts in the industry, including being a delegate trustee to
the first Sukuk Issuance in Nigeria, the State of Osun Sukuk Al-Ijara, and the first sovereign Sukuk to be issued in Nigeria, and the N100B FGN Road Sukuk 1 issued by the Federal Government. What operating culture helped you to achieve these many firsts?
I think it is all about our service delivery and competence. These are specialised transactions, and not everyone is knowledgeable in that area of business. It has to do with knowledge, competence, and service delivery.
What are some of the products on offer at STL Trustees?
To simplify the concept of trusteeship for our customers and make the same readily available no matter an individual’s income level, we have a bouquet of customised retail products tailored to meet the needs of individuals across a broad spectrum. These products include:
STL CRV: This is a savings product which is designed for income earners who are mindful of preparing ahead for post-retirement from paid employment, in addition to the mandatory pension contributions under the law as well as self-employed individuals who want to secure their future when they would be less active and earn a lower income. The product is targeted at the middle to the lower-income earners and ensures that they can maintain a lifestyle akin to what they enjoyed while active. It is pertinent to also add that this product has an insurance benefit and the contributor gets a specified amount on the happening of certain events.
STL TARGET: This is specifically designed for persons who wish to set aside some funds to meet a particular need at some determinate time in the future. The advantage of this product is that it simplifies savings for events by the client and ensures that the funds are available for the required purpose.
STL CET is a product structured to enable parents and guardians to set up a trust fund for their children’s education. STL Trustees will hold such funds under a trust instrument as trustee to named beneficiaries and preserve the funds, including all accumulated income thereon. The contributions for this product are periodic and gradual to enable one to build up the fund to achieve the desired objective. One can also make a lump sum payment if desired.
