Ride-hailing firm Metro Africa Xpress (MAX.ng) has secured ₦400 million ($1 million) in capital under a Private Company Bond programme. The bond is the first-of-its-kind in sub-Saharan Africa (save for South Africa) and the company hopes to eventually raise as much as ₦10 billion, about $22 million.
According to a report, the transaction is the first securitisation of motorcycle, tricycle, and other classes of vehicle finance assets in the region. It is also regarded as the first bond issuance and asset-backed bond transaction by a mobility company on the continent.
Since the commencement of its ride-hailing business and consumer services in Nigeria, MAX has successfully completed over 2 million trips with more than 2,000 drivers in Nigeria, according to data from the company. It hopes the new issuance would further help expand into new markets as it continues to “institutionalise driver financing across the continent.”
As indicated by the report, proceeds from the bond will be used to fund MAX’s growing asset financing programme across two-wheeler, three-wheeler, and other vehicle classes in Nigeria and beyond.
Traffic congestion, parking problems, accidents, and environmental pollution remain key urban transportation challenges in Africa, particularly in Lagos. Although the state government over the past three dispensations have introduced bus transports systems to mitigate the challenges, the poor states of constantly renovated or constructed road networks have made efforts nearly futile.
2018 birthed ride-hailing motorcycles in the state with the advent of Gokada, which allowed customers to order a motorbike ride through the company’s website, or by using the company’s geo-location-based mobile app. MAX.ng was founded in 2015 as a logistics startup relying on two-wheelers but has since expanded to provide full on-demand consumer transportation.
The influx of motorcycle hailing startups in Lagos has since facilitated mobility and delivery, triggering a reduction in the cost of transportation in the state. The holiday was, however, cut short by a ban on commercial passenger motorcycle operations in the state, forcing many of these companies who had entered the market via funds from Venture Capitalists to reinvent into delivery services.
Despite the headwinds faced last year and the impact of the coronavirus, MAX expected to create further positive economic impact with this new bond. “Given the average cost of the vehicles financed, the capital unlocked through the Series 1 Bond will lead to the creation of close to 1,400 additional jobs, which in turn has a positive multiplier effect on the Nigerian economy,” said Adetayo Bamiduro, MAX.ng CEO and co-founder.