AFEX, a Nigerian-based commodities player has listed its N100 billion 3-year Asset-Backed Commercial Paper (ABCP) Programme on its Exchange.
According to the company, this aims to provide affordable financing solutions to agro-processors, bridging the current financing gap.
The paper listing, which was celebrated at a bell ringing ceremony in Lagos on Tuesday, had in attendance representatives from AVA Capital, FSDH Holdings and Marble Capital.
Samirah Ade-Adebiyi, MD AFEX Investment speaking at the bell ringing ceremony disclosed the importance of the paper as instrumental to diversifying agriculture financing.
“Through the ABCP we are prioritizing impact focused investments, as this allows agri-businesses to unlock essential capital for their working capital needs, contributing to the growth of the sector. This is also a historic moment for us, because the ABCP happens to be the first-ever commodities backed ABCP listed on a commodities exchange in Nigeria,” she said.
The ABCP, which serves as a debt financing instrument according to the firm, allows the issuer to provide short-term working capital for agri-service companies. This vital infusion of funds empowers companies to meet their immediate business needs, ensuring they can effectively manage short-term obligations, thereby enhancing productivity and overall output
Efe Shaire, MD AVA Asset Management said, “For potential investors and the public, the ABCP Programme offers a fresh and alternative avenue for investment. It allows diversification of portfolios from traditional stocks and fixed income to commodity-backed investments, providing benefits such as risk management and superior financial returns.”
The AFEX Investment Limited SPV ABCP, valued at $130 million according to the firm, was the first commodity backed ABCP announced in Nigeria and was initially launched in 2021 as a three-year commercial paper programme, with the previous 2 series successfully raising ₦51 billion. The listing of the ABCP presents an opportunity to diversify the investor pool to retail and institutional investors, facilitate efficient price methodology and transparency for accurate portfolio valuation and most importantly, contribute to securing funding to stabilize Nigeria’s agriculture sector and close the funding gap which sits at $183 billion today.
Under this listing, AFEX Investment Limited SPV serves as the issuers of the paper, with FSDH, Marble Capital and AVA Capital Partners appointed as joint dealers and arrangers of the Notes.
The asset-backed nature of the ABCP qualifies it as a senior secured debt instrument, bolstering investor confidence. Competitive pricing under the ABCP Programme translates into cost savings of up to five percent compared to traditional capital access methods. Additionally, issuers enjoy an additional cushion of approximately 25 to 30 percent from price volatility inherent in commodity prices each season.