THREE COMPANIES SEEK N40B NEW CAPITAL EXPANSION.

Three companies are raising about N40 billion in new capital from the general investing public as companies increasingly resort to non-equity financing options.

Offer documents obtained at the weekend showed that three companies in the financial services sector are raising a total of N39.5 billion through the issuance of commercial papers and non-interest bonds.

The three companies currently in the primary market raising capital include FSDH Merchant Bank, TAJBank, and VFD Group Plc.

Market analysts said the increasingly sizeable flow of debt issuances and the combination of interest and non-interest instruments showed the diversification and depth of the Nigerian capital market.

Analysts noted that additional capitalisation of financial services companies could also indirectly lead to extended financial support to other businesses.

FSDH Merchant Bank is raising about N24.5 billion through the issuance of Series 8, Series 9, and Series 10 of its commercial papers (CP). It had earlier registered a N40 billion CP issuance programme.

The wholesale bank is offering three tranches of 90-day, 152-day, and 180-day CPs to raise a total of N24.5 billion. FSDH Merchant Bank is offering a 15.00 percent implied yield and a 14.4650 percent discount rate for 90-day CPs. It is also offering a 16.00 percent implied yield and 15.0005 percent discount rate for 152-day CPs while subscribers to 180-day CPs will receive an implied yield of 17.00 percent and discount yield of 15.6850 percent.

FSDH Merchant Bank will use the net proceeds of the issuance to fund short-term working capital and other general corporate requirements.

TAJBank, a national non-interest bank, under the first tranche of its Sukuk issuance programme, is raising up to N10 billion through its special purpose vehicle- Taj Sukuk Issuance Programme SPV Plc.

The company is offering series 1 Mudarabah Sukuk at N1,000 per Sukuk certificate with a projected profit of 15 percent per annum.

The net proceeds of the Sukuk will be used by TAJBank as additional Tier-1 Capital under the capital regulation and will be used by the bank to support its Tier-1 capital for the purpose of maintaining its capital adequacy and for its general corporate business activities.

VFD Group - a proprietary investment holding group, is raising N5 billion under its Series 1 commercial paper. The net proceeds of the offer will be used to support the company’s short-term working capital and funding requirements.

VFD Group’s new capital will strengthen VFD Group’s investments in key sectors of the economy. VFD Group seeks out viable opportunities that cater to the investment needs of retail and institutional investors across all tiers for direct market gain. The firm leverages sound investment expertise and deep knowledge of market fundamentals into securing investments that yield optimum returns to its shareholders.

The core of VFD Group’s business strategy is unlocking opportunities for value creation in the Nigerian and African informal sectors while creating innovative and accessible products and solutions within the formal sector.

The firm’s portfolio spans financial services, asset management, real estate, and fintech and includes companies such as Abbey Mortgage Bank, Tempo Electric, Piggy Vest, and VFD Microfinance Bank.

Read the original article on The Nation.