On Wednesday, 24th August 2017, the African Export-Import Bank (Afreximbank) met with leading Nigerian investors at the Intercontinental Hotel Lagos. They met to push for strong participation in the Bank’s $300 million equity offering. The bank is using depositary receipts backed by its Class “D” shares for the offering.
“We are in Nigeria because we believe that Nigeria should take hold of the investment,” said Benedict Oramah, President of Afreximbank.
The depositary receipts, which will be listed on the Stock Exchange of Mauritius and is being managed by State Bank of Mauratius (SBM) Asset Mangers as lead arranger, will open Afreximbank shareholding to the investor public. This will be the first time a Pan-African multilateral financial institution is issuing depositary receipts through an African stock exchange.
Afreximbank is aiming to raise between $100 million and $300 million through the depositary receipts issuance in Nigeria. This is part of its target to mobilise up to $1 billion in equity from new and existing investors over the next five years. The minimum amount to be invested is $30,000.
Dr Benedict Oramah, President of Afreximbank, told the investors that the issuance of the depositary receipts was to enhance the Bank’s capitalization so as to significantly narrow the trade financing gap in Africa, which is currently estimated at $120 billion annually, and to meet the strategic objective of growing intra-African trade.
The issuance also represents an opportunity for Afreximbank to diversify its shareholder base by enabling investors in Africa and beyond, who have not yet invested in the Bank to do so, added the President. He noted that Afreximbank had consistently delivered development impact in its member countries, including Nigeria where virtually every banking institution had benefited from its support.
Why Mauritius was chosen for the depository receipt
According to Kee Chong Li Kwong Wing, Chairman of SBM Group, the decision to use Mauritius for the depositary receipts issue took into account the country’s highly developed financial services system and its experience in similar investment drives. The country played a major role in raising billions of dollars in investment into India. More than 50 percent of Foreign Direct Investment that goes into India is from Mauritius. Mauritius also has a strong Stock market and a favourable Tax regime.
As part of Mauritius’ support for the Afreximbank depositary receipts issue, the government of Mauritius plans to grant permanent residency to investors putting in up to $500,000.
What you didn’t know about Afrexim Bank
- Afrexim Bank is the foremost Pan-African multilateral financial institution devoted to financing and promoting African trade.
- It was established under two basic constitutive instruments which are the Agreement signed by member States and multilateral organisations, which gives the bank the status of an international multilateral organisation and the Charter, which governs its corporate structure and operations.
- The bank was established in October 1993 by African governments, African private and institutional investors, and non-African investors.
- Afrexim Bank commenced operations on 30 September 1994, following the signature of a Headquarters Agreement with the host Government in August 1994.
- Since 1994, it has approved more than 51 billion dollars in credit facilities for African businesses, including about 10.3 billion dollars in 2016.
- Afreximbank has total assets of 9.4 billion dollars as at April 30, 2016
- The Bank is rated BBB+ (GCR), Baa1 (Moody’s), and BBB- (Fitch).
- The bank is based in Cairo, Egypt.
- Afreximbank’s shareholders are a four-tier mix of public and private entities.
- Class “A” shareholders are constituted of African states, African central banks and African public institutions.
- Class “B” shareholders are made up of African financial institutions and African private investors;
- Class “C” shares are held by non-African investors, mostly international banks and export credit agencies.
- Class “D” fully paid shares can be held by any investor.