AFEX Lists N100bn Commercial Paper To Drive Agric Business

Commodities exchange player,  AFEX has listed its N100 billion 3-year Asset-Backed Commercial Paper (ABCP) programme to provide affordable financing solutions to agro-processors and bridge the current financing gap.

This, it said, is a strategic move to drive growth in the agricultural business and value chain.

AFEX investment SPV stated yesterday that the issuer is providing short-term working capital for agri-service companies with the infusion of funds to meet their immediate business needs, while ensuring they can effectively manage short-term obligations while enhancing productivity and overall output.

AFEX Investment Limited SPV Asset-Backed Commercial Paper (ABCP) valued at $130 million (N100 billion) was the first commodity backed ABCP announced in Nigeria which was initially launched in 2021 as a three-year commercial paper programme, with the previous 2 series successfully raising N51 billion, as the listing of the ABCP presents an opportunity to diversify the investor pool to retail and institutional investors facilitating efficient price methodology and transparency.

This, however, contributes to securing funding to stabilise Nigeria’s agriculture sector and close the funding deficit which sits at $183 billion.

While speaking at the bell-ringing ceremony, the managing director, AFEX Investment Limited, Samirah Ade-Adebiyi, stated that the importance of the paper is instrumental to diversifying agriculture financing.

“Through the ABCP we are prioritizing impact focused investments, as this allows agri-businesses to unlock essential capital for their working capital needs, contributing to the growth of the sector. This is also a historic moment for us, because the ABCP happens to be the first-ever commodities backed ABCP listed on a commodities exchange in Nigeria,” she asserted .

The paper listing, which was celebrated at a bell-ringing ceremony in Lagos, had in attendance representatives from AVA Capital, FSDH Holdings, and Marble Capital appointed as joint dealers and arrangers of the notes.

Under this listing, AFEX Investment Limited SPV serve as the issuers of the paper, with FSDH, Marble Capital and AVA Capital Partners appointed as joint dealers and arrangers of the Notes.

Managing director, AVA Asset Management, Efe Shaire expressed enthusiasm for the prospects of the ABCP for the industry.

“For potential investors and the public, the ABCP Programme offers a fresh and alternative avenue for investment. It allows diversification of portfolios from traditional stocks and fixed income to commodity-backed investments, providing benefits such as risk management and superior financial returns,” he averred.

Hence, the asset-backed nature of the ABCP qualifies it as a senior secured debt instrument, bolstering investor confidence. Competitive pricing under the ABCP Programme translates into cost savings of up to five per cent compared to traditional capital access methods. Additionally, issuers enjoy an additional cushion of approximately 25-30 per cent from price volatility inherent in commodity prices each season.