AFEX, Nigeria’s commodities market player is planning to raise $175 million as it reopens its $240 million Asset-Backed Commercial Paper (ABCP) targeted at offering Agro-processors low-cost financing to bridge the funding gap between lenders and borrowers.
The new funding target represents the second in a three-year Commercial Paper program that started in the last quarter 2021 and saw the sum of $65 million raised during the period. In its attempt to ensure adequate supply of fund in the Nigerian agriculture sector, it said it is seeking to raise an additional $175 million to allow for processors to borrow in the commercial paper markets.
Ayodeji Balogun, CEO at AFEX noted that the Exchange has a strong track record in offering distinctively differentiated and innovative financial instruments to the marketplace, noting that the new Asset-Backed Commercial Paper will help bridge the gap between Agro-processors and investors especially as access to low-risk funding and capital is critical to empowering Africa to feed herself.
“We believe in making capital that is a right fit, in terms of timeliness and structure, available for all players in the value chain. Based on our past performance, we are confident that we will attract even more financing from private investors and, subject to value for money, they will help us secure this $175million (N73billion) investment in Africa’s food security,” he said.
What you should know
- The ABCP is a short-term debt instrument which AFEX is leveraging to improve efficiency of the commodity market by providing investors with a competitive 15% return on their investment – maturity is up to 270 days.
- Banks or other financial institutions issue the security while the ABCP Notes are sponsored by AFEX Commodities Exchange and the proceeds of the issuance is used by AFEX Investment Limited to provide pre-qualified Agro-processors with working capital support to enable them to purchase commodities required for their production processes at an agreed price.
- AFEX had earlier raised $48 million (N19 billion) from Africa’s agro-tech sector’s 20% oversubscribed Warehouse Receipt Backed Commercial Paper prior to 2021 to boost food security as well as ensure availability of food supply.