In line with the focus of President Muhammadu Buhari’s administration to revitalize Nigeria’s industrial sector and create 10 million jobs by leveraging the Nigeria Industrial Revolution Plan and the Economic Recovery and Growth Plan, the Bank of Industry (BOI) recently concluded raising the sum of €1 billion (approximately $1.11billion) from the international capital market.
The transaction is aimed at improving the capacity of the bank to continue to effectively support Micro, Small, Medium and Large enterprises (across key sectors) of the Nigerian economy with affordable loans of medium to long-term tenor, alongside moratorium benefits.
African Export-Import Bank, Credit Suisse, Rand Merchant Bank and Sumitomo Mitsui Banking Corporation were the Joint Mandated Lead Arrangers, Underwriters and Book runners of the Syndicated Medium-term Facility. The investors include the Lead Arrangers, alongside 20 other international financial institutions.
As part of the roadshow, the management team of the Bank of Industry presented its information memorandum to an audience of about 60 potential investors in London in December 2019. The investors were particularly impressed with the business model and corporate governance structures of the bank.
The transaction was subsequently launched on 15th January 2020 with an initial size of €750 million. Upon closing on 19th February 2020, the deal was oversubscribed by 60%. The deal size was thereafter upsized to a sum of €1 billion.
The transaction is a further confirmation of the acceptance of the Bank of Industry in the international financial market, following its first successful fundraising transaction in 2017, which raised $750 million from a syndicate of 16 international banks.
Key factors that led to the success of this deal include amongst others, the impressive credit ratings of the bank (Long Term Issuer Default Ratings of B+, B2 and Aa from Fitch, Moody’s and Agusto respectively), its ISO certifications in both Quality Management Systems and Information Security, as well as the strong strategic partnership that the bank has developed with the Nigerian commercial banks, who provide credit enhancements and de-risking tools to BOI customers.
Of particular and special note is the support of the Governor of the Central Bank of Nigeria and his Committee of Governors, which was crucial to the success of this transaction. The Apex Bank-supported BOI throughout the entire process with technical advice and all approvals as required that saw this transaction through from inception to its conclusion. The Central Bank also provided BOI with 100% currency swap to mitigate the foreign exchange rate risk.
The facility will be disbursed in Naira at single digit interest rate to borrowers with bankable projects.
In 2019, the Bank of Industry with the support of its various stakeholders disbursed a total of ₦234 billion to 10,145 enterprises, thus creating over 1 million estimated direct and indirect jobs.
With the successful conclusion of this €1 billion medium-term syndicated facility, BOI (which is owned by the Central Bank of Nigeria and the Federal Ministry of Finance Incorporated) is poised to catalyze domestic production and job creation on a transformational scale, enhance local industry competitiveness, attract domestic and foreign investments, integrate our local industries into domestic, regional and global value chains, grow our export earnings and positively impact the overall economic development of Nigeria in line with its mandate.