Lagos Free Zone Company Debuts N10.5 Billion Series 1, 20 Year Infrastructure Bond

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Lagos Free Zone Company (LFZC), the first free zone in Nigeria with a fully integrated deep seaport, is pleased to announce the successful issuance of a NGN10.5 billion 20-Year Series 1 Senior Guaranteed Fixed Rate Corporate Infrastructure Bonds Due 2041 (the “LFZ Bonds”) under a NGN50 billion Debt Issuance Programme.

LFZC is the infrastructure development subsidiary of the Tolaram, the Singaporean conglomerate with more than 45 years of presence in Nigeria and business interests in consumer goods, infrastructure and fintech space.

Lagos Free Zone is being developed as the largest integrated port based economic zone in Nigeria and shall serve as the beacon of industrial development across Nigeria and West Africa. Enterprises operating in the Lagos Free Zone will benefit from various policy incentives underpinned by the legislative framework applicable for free zones in Nigeria.

In line with its vision statement “to be the preferred industrial hub in West Africa with world-class infrastructure”, the zone is equipped with a host of shared industrial infrastructure necessary for attracting investments from the leading trade partners of Nigeria.

Backed by an irrevocable and unconditional guarantee from InfraCredit, LFZC Series 1 Bond is accorded a ‘AAA’ long term credit rating by Agusto and Co. and GCR, reflecting the highest degree of creditworthiness for these bonds.

The Series 1 Bond, a 20-Year Guaranteed Fixed Bond, was oversubscribed by institutional investors including eleven domestic pension funds, two insurance firms, banks and HNIs.

The transaction is the first 20-year non-FGN Bond issue in the Nigerian debt capital market and the first Securities and Exchange Commission approved Infrastructure Bond for the development of an industrial hub.

The Series 1 Bond priced at a modest premium to the comparable FGN Sovereign Bond, provides a unique opportunity for pension fund managers, life insurance firms and other institutional investors to match their long-term liabilities with low-risk, high yield assets.

Speaking on the transaction, the Chief Finance Officer (‘CFO’) of LFZC, Mr. Ashish Khemka stated: “This is a milestone transaction for us at Lagos Free Zone Company and it is a testament to the capacity of the Nigerian debt market as a veritable source of domestic capital for infrastructural development in Nigeria.

The response to this bond program further strengthens our commitment to realize our vision and thereby enhance Nigeria’s competitive positioning with our continuous focus on Ease of Doing Business parameters.

LFZ further underscores Nigeria as a compelling industrial hub within the West African coast and ideally orients itself in anticipation of the imminent single market regime under AfCFTA.

We are particularly excited by the confidence demonstrated by pension fund managers and other institutional investors at this debut issue and we appreciate the team at InfraCredit, StanbicIBTC Capital and other parties to the transaction for this novel structure, which helps to de-risk the transaction and aligns the interest of different stakeholders”.

According to the CEO of InfraCredit, Chinua Azubike, “It has been exciting working with Lagos Free Zone Company on this landmark transaction. It further demonstrates our commitment towards inclusive access to long term local currency finance for infrastructure development.

Interestingly, LFZC has set a new benchmark in the Nigerian domestic debt capital market, as the first 20-Year Corporate Infrastructure Bond in Nigeria, elongating the corporate bond yield curve and reinforcing the prospect for Nigerian Corporates to raise long term finance within the local market.

The LFZC Bonds validates the appetite of domestic pension funds and other institutional investors in financing viable long term infrastructure assets. We would continue to partner with all relevant stakeholders in executing novel strategies towards unlocking domestic capital for infrastructure finance, in addition to creating quality asset classes for diversifying investment portfolios of local institutional investors.

Also commenting on the transaction, Funso Akere, Chief Executive of Stanbic IBTC Capital Limited, said: “Stanbic IBTC Capital, FBNQuest Merchant Bank and Radix Capital Partners are delighted to have advised LFZC on this landmark 20-year Infrastructure Bond issuance, which evidences the depth and liquidity of the Nigerian debt capital markets and aligns with the pension fund industry’s growing demand for quality long-dated assets.

The success of the transaction demonstrates investors’ confidence in the vision and purpose of the Lagos Free Zone and we thank the Board and Management of LFZC for giving the Issuing Houses a free hand to guide the process to a successful completion.

Supporting infrastructure development is a key pillar for Stanbic IBTC and we are very pleased to have acted as Lead Issuing House to this landmark infrastructure bond issuance, which is the longest tenor corporate bond issuance in the history of the Nigerian debt capital markets.”

Funso noted that LFZC is focused on delivering essential infrastructure to ease the cost of doing business and facilitate the entry of global industrial brands into Nigeria, which is expected to boost sustainable development, galvanize economic growth and improve the livelihoods of Nigerians, while also deepening the Nigerian debt capital markets through the issuance of innovative debt instruments.

Incorporated under the provisions of Nigeria Export Processing Zones Authority (NEPZA) Act of 1992, Lagos Free Zone Company (“LFZC”) was established in 2002 and commenced operations in 2008. Promoted by Tolaram , a Singapore based Conglomerate, LFZC is granted the right to privately develop and manage the Lagos Free Zone, located at Ibeju Lekki, Lagos.

It is fully equipped with world-class infrastructure, a single clearance window for ease of doing business, and integrated with the 90 hectares Lekki deep seaport, which allows for access to regional and international markets. With a focus on the ease of doing business, Lagos Free Zone is at the forefront of serving global businesses in Nigeria.

Covering 830 Hectare Area, fully integrated with the Lekki Port, LFZC is envisioned to be the preferred industrial hub in West Africa with world class infrastructure. With more than ten year of project development, LFZC has secured USD2.1billion committed investments, with USD 1billion investment already made. LFZC concept is to have 70%, 20% and 10% industrial, logistics & support and real estate development respectively.

The promoters of this zone are Tolaram, who are headquartered in Singapore and have been the market leaders within the FMCG business in Nigeria. Indomie noodles is one of the major success stories for the group in Nigeria.

The group has forged strategic partnerships with international FMCG brands which have already setup their manufacturing plants within the Lagos Free Zone – such as Kellogg’s, Colgate, Arla Dairy, which stand as a testimony to the unrivalled investor confidence garnered by this group and the initial success of this Industrial zone.

InfraCredit is a ‘AAA’ rated specialised infrastructure credit guarantee institution backed by the Nigeria Sovereign Investment Authority, Private Infrastructure Development Group companies – GuarantCo, InfraCo Africa; KfW Development Bank, Africa Finance Corporation, and African Development Bank, to provide local currency guarantees and mobilize long term debt financing for infrastructure in Nigeria.

InfraCredit’s guarantees act as a catalyst to attract domestic credit from pension funds, insurance firms and other long-term investors into credit-worthy infrastructure projects, thereby deepening the Nigerian debt capital markets. InfraCredit operates on a commercial basis with a developmental role and benefits from private sector governance.

InfraCredit maintains the highest domestic financial strength ratings accorded to any financial institution by Agusto and Co. and Global Credit Ratings Co., two of the major domestic credit rating agencies. For more information please visit www.infracredit.ng and follow us on Linkedin and Twitter.

Stanbic IBTC Holdings PLC is a full-service financial institution which offers a wide range of products and services to a variety of segments. It provides end-to-end financial solutions which include corporate and investment banking, personal and business banking, stockbroking and wealth management.

Stanbic IBTC Bank PLC is a member of the Standard Bank Group, Africa’s largest African bank by assets with footprints across 20 African countries including South Africa. Standard Bank Group has been in operation for over 150 years.

The Group’s vision is “To be the leading end-to-end financial solutions provider in Nigeria through innovative and customer-focused people”. The Group through its various subsidiaries ensures that it provides clients with solutions to suit their needs through sound business principles.

Stanbic IBTC upholds high standards of corporate governance with a Fitch “AAA’ rating and is committed to advancing the principles and practice of sustainable development.

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