DLM Capital Group Redeems N20.16bn

DLM Capital Group has redeemed a major part of the CERPAC Receivables Securitisation Funding(SPV) and paid investors N20.16billion.

These redemptions were for the Discrete and Series one bonds executed by the Group. The CERPAC N25 billion Securitisation Programme is a five-year bond issuance created in May 2017 to raise funds in connection with the funding programme for the purchase of current and future receivables accruing to the seller from the sale of the Combined Expatriate Residence Permit and Alien Cards (CERPAC Cards) in Nigeria.

Since its creation in 2017, CERPAC has had four issues: the first N4.877 billion 5-year 18.25 per cent Discrete Bond due 2023; the N12.5 billion 5-year 15.25 per cent Series 1 bond due 2023; N1.600 billion 5-year 15.5 per cent Series 2 bond due 2023 and the N1.250 billion Series 3 bond due 2028.

In November 2019, an asset backed commercial paper of about N2.87 billion was issued and fully repaid in June 2020. On January 15, 2023, the Discrete N4.8 billion and Series 1 N12.5 billion matured and were fully paid.

Since the course of the CERPAC transaction, DLM Capital Group had raised about N23.011 billion and paid a total sum of N31.144 billion covering both Principal and coupons to date.

Group managing director/CEO of DLM Capital Group, Mr. Sonnie Ayere said: “the current collateral cover to the remaining investors in Series 2 & 3 as at December 2022 was 34.5x, average DSCR (including principal) is approximately 4x and current credit enhancement is 64.17 per cent.

“Based on these facts, the rating agencies should have re-rated the deal for an upgrade. This was the first ever SEC approved combined offer, which allowed the SPV to issue both debt & equity at the same time and from the same prospectus to investors. Whilst the debt has performed fantastically well, so has the equity.”

He added that the equity investment returned year-on-year, an average of 55.65 per cent per annum beating most market indices, appreciating from N50 a share to N189 a share as of December 2022.

He explained further that, “whilst this transaction was initially frowned upon by real money managers in 2017, we were glad to note that at final redemption, a big chunk of the paper was finally held by the Funds as they had come to find comfort from its fantastic performance and transparency.”

The managing director, DLM Trust Company Limited, Mrs. Ololade Razaaq remarked that the receivables had posted very strong cashflows over the last decade till date, saying, “since the inception of the programme, there have been no record of delinquency or default as all investors received their principal and full coupon as and when due.

“This was also the first transaction in Nigeria to provide investors with a 100 per cent transparency by providing investors with detailed monthly performance reports.”