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InfraCredit guarantees GPC Energy and Logistics N20bn infrastructure bond

InfraCredit, a ‘AAA’ rated specialized infrastructure credit guarantee institution, has guaranteed GPC SPV Company Plc’s (GPC-SPV) N20billion 10-Year Series 1 Senior Guaranteed Fixed Rate Infrastructure Bonds Due 2031 (the GPC Series 1 Bond) under the N50 billion Debt Issuance Programme.

GPC Energy and Logistics Limited (GPC) is a leading, fast growing transport and logistics services provider. With over a decade of operations, GPC provides essential transport and logistics services to several multinational companies in Nigeria operating across the FMCG, agriculture and construction sectors covering an average of 2.8million kilometers monthly. GPC operates its fleet under term contracts as it leverages a unique integrated transport and logistics model in delivering best-in-class support to the industry.

GPC is a first-time issuer in the debt capital markets, and leveraging on InfraCredit’s guarantee, the 10 year GPC Series 1 Bonds was accorded ‘AAA’ long term credit rating by Agusto and Co. and DataPro Limited, reflecting the high degree of creditworthiness and the strong quality of the Bonds. The Bonds was oversubscribed by 25.3 per cent from nine (9) institutional investors including the domestic pension funds.

The bond proceeds will be used to finance the acquisition of additional trucks to sustain the strong growth trajectory of the company in meeting the burgeoning demand from clients across key growing sectors of the Nigerian economy. In addition, part of the proceeds would be used to refinance existing foreign currency denominated loans, thereby appropriately matching the currency of its revenues to that of its debt obligations. The success of this financing will provide up to 220 trucks under term contracts that will create 360 direct and indirect jobs.

GPC-SPV Series 1 Bonds was priced off the yield on the comparable FGN Sovereign Bond, therefore providing a unique opportunity for institutional investors to match their long-term liabilities with “AAA”-rated, low-risk assets with appropriate risk-adjusted returns.

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Chukwudi Elvis Okonji, Chief Executive Officer of GPC Energy and Logistics Limited said, “This maiden bond transaction is an important milestone for GPC, as it provides the leverage to finance our next transformational growth phase. More importantly, the success of this transaction reinforces our capacity to enhance service delivery to our growing clientele, who play significant roles across different growth sectors of the Nigerian economy.”

“I am therefore profoundly grateful to the investors in our debut debt offering, especially the Nigerian pension fund managers, whose investment in our Bonds demonstrates the ability of local institutional investors to finance a private-sector-led infrastructure development in Nigeria. I like to thank the entire InfraCredit team, the Guarantor of this Series 1 Bonds, whose novel structure and creditworthiness helped to de-risk the transaction and crowd-in investors into the Bonds. I am particularly grateful to the Financial Adviser/Lead Issuing House, Planet Capital Limited, and the other Issuing Houses for their role through the transaction cycle. We would leverage this new financing opportunity to scale up our operations, deepen penetration and enhance operational efficiency,” Okonji said.

According to Chinua Azubike, CEO of InfraCredit, “COVID-19 pandemic negatively impacted all transport operations, leading to severe disruptions of supply chains and trade flows worldwide particularly developing economies like Nigeria. Investment in transport and integrated supply chain infrastructure is an essential part of the country’s post-pandemic economic recovery and achieving the SDGs.

InfraCredit’s guarantee on the GPC Series I Bonds further demonstrates our commitment towards inclusive access to long term domestic credit to the private sector for infrastructure development and the deepening of the debt capital markets with quality asset classes for local institutional investors.

Over the past decade, GPC has built a strong brand, reputed for efficiency in the transportation and logistics industry, and we are pleased to support the experienced management in transitioning to the next phase of the company’s growth strategy, particularly given the importance of transportation sector to the recovery and growth of the Nigerian economy.

The remarkable success of this guaranteed-bond, for a first-time issuer, validates the commitment and appetite of domestic pension funds in financing viable and sustainable infrastructure assets whilst also reinforcing the prospects for private sector to raise long term local currency finance from the domestic debt capital markets.”

Planet Capital Limited acted as Lead Issuing House/Bookrunner and Ecobank Development Company Limited, Lighthouse Capital Limited and PAC Capital Limited acted as Joint Issuing Houses and Bookrunners for the transaction.

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