Domestic Bonds

‘Presco’ – Nigerian edible oil processor receives massive backing for first $82.8m bond

Nigerian edible oil

Presco Plc, a fully integrated palm oil processor, has issued 34.5 billion naira ($82.8 million) of seven-year fixed rate bonds under its debt issuance program bonds of 50 billion naira ($120 million). The Series 1 bond issue, according to the company, was 247% subscribed and at a coupon price of 12.85%.

It has attracted a diverse group of investors including pension funds, asset managers, insurance companies, banks and high net worth individuals. The specialist fats and oils supplier sought to raise N30 billion, but the backlog closed at N74 billion, so the company opted to issue an additional 15% to investors, raising a total of N34.5 billion.

Stanbic IBTC Capital Limited served as the lead issue house for the bond issue, while CardinalStone Partners Limited and Quantum Zenith Capital and Investments Limited served as joint issue houses.

“We thank the institutional investor community for their support of the issuance,” said Stanbic CEO IBTC Capital“as its success should encourage other similar ventures to access domestic debt capital markets for their strategic financing needs.”

“We also thank the board and management of Presco for allowing the issue houses to operate freely.” The bonds, according to This Day, will be listed on the Nigerian Exchange Limited and the FMDQ Securities Exchange.

This follows the company’s recent agreement to seek full ownership of rival Siat Nigeria Limited (SNL), a subsidiary of Belgian group Siat SA. The transaction will involve all SNL shares of Siat SA, totaling 7,330,965,143, for a unit price of N2.86 and a total cash consideration of N21 billion ($50 million).

SNL was founded on December 11, 1991 as a 100% subsidiary of Siat SA. The Rivers State government sold the company’s assets, which included 16,000 hectares of former palm plantations as well as the entire social and industrial infrastructure of the oil palm industrial complex, to Risonpalm in 2011.

SNL currently operates from two estates in Rivers State, Ubima Estate and Elele Estate, and has invested N6 billion in expanding its operational capacity over the past five years.

Following this acquisition, Presco intends to broaden its scope of action both upstream and downstream of the palm oil production chain in order to strengthen its presence in Nigeria, the leading market on the African continent.

Presco currently has a crushing capacity of 90 tonnes per hour and a vegetable oil refinery of 500 tonnes per day, while SNL has a 60 tonne plant which when combined will increase the added value . Presco’s strategic move is aimed at driving the company’s long-term growth and profitability.