FHFL’s N10bn Sukuk issuance targets affordable housing for low-income earners

For low-income earners seeking homes to own, good news is here as Family Homes Funds Limited (FHFL) has successfully completed the issuance of N10 billion under the N30 billion Sukuk Issuance Programme, targeting affordable housing development.

The 7-Year 13 percent Series 1 Ijara Lease Sukuk due 2028, is the first-ever certified corporate Sukuk issued in Nigeria and it is expected to provide the necessary support for FHFL’s goal of providing affordable homes across Nigeria.

Expectation is that the net proceeds from this issue will finance new homes for Nigerians on low income across Nigeria and, according to Femi Adewole, FHFL’s CEO, this issue will contribute to their objective of developing up to 200,000 homes by December 2022.

Adewole, who spoke at the signing of the Sukuk Issuance in Abuja, noted that the landmark event was a major impetus to the Funds’ vision to transform the housing market by making safe decent housing accessible to Nigerians, especially those on low income.

Zainab Ahmed, Minister of Finance, hoped that the Sukuk Issuance would strengthen Family Homes Funds’ dedication to its core principles and expand its ability to offer wider opportunities for millions of Nigerians who rely on them to realize their homeownership dreams.

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To date, FHF which started operation in 2017, has financed the development of about 11,700 homes for low-Income earners across some states in Nigeria, including Delta, Ogun, Kano, Nasarawa, Kaduna, Yobe, Bauchi, Borno and Adamawa, and has created up to 64,000 direct and indirect jobs in the process.

Over the next 4years, specifically through its affordable housing projects, the company aims to invest up to N1.3trn in the development of 500,000 homes for people on low income. In the process, up to 1,500,000 jobs will be created while homeownership through its creative products will be enabled.

The Sukuk Issuance is, therefore, an important step in the Funds’ journey towards realizing its goals which have become all the more necessary as the number of people who cannot afford their own homes without the government’s support increases by the day.

Apart from this issuance being the first-ever corporate Sukuk certified by the Financial Regulation Advisory Council of Experts (FRACE) of the Central Bank of Nigeria, the transaction also represents the Funds’ debut in the Nigerian Debt Capital Markets. It was 2.1 times oversubscribed.

The Book Build process for the transaction was launched on Friday, June 25, 2021, and was completed on Tuesday, July 6, 2021. The transaction was well received and attracted significant demand from a wide range of high value and quality investors including pension funds, ethical funds, fund managers, non-finance Islamic institutions, trustees, corporate and high net worth individuals.

The total value of orders received during the Book Build was N21.3 billion, representing a 2.1 times oversubscription of the intended N10 billion. The issuance was launched at a rental rate of 13.00 percent per annum. Notwithstanding current market dynamics and volatility, this debut transaction had tremendous support from the debt capital market.

The Series I Sukuk Issuance reinforces the company’s commitment to facilitating the provision of affordable homes and diversifying its funding sources, as well as the resilience of the domestic debt capital market. Family Homes will deploy the net proceeds to finance and develop affordable homes for low-income earners.