North-South Power Company (NSP) Limited, the concessionaire of the Shiroro and Gurara power plants, is scheduled to close the book building and offer for the second series of N5.5 billion under its N50 billion programme today.
NSP, through its special purpose vehicle (SPV), NSP-SPV PowerCorp Plc, is seeking to raise N5.5 billion under its Series 2 10-Year Fixed Rate Senior Unsecured Bond. The price range for the issue is between nine per cent and 10.00 per cent per annum.
The minimum subscription to the bond issue is 1,000 units at N1,000 per unit and subsequently in multiples of N1,000. The bond’s fixed coupon will be paid twice a year while the redemption will be done through equal amortised semi-annual redemption of the principal.
The bond is expected to be listed at the FMDQ Securities Exchange and Nigerian Stock Exchange (NSE), providing investors with opportunities to trade on their bonds after listing.
Regulatory documents showed that the net proceeds of the N5.5 billion bond will be used to finance capital projects aimed at the development of a 15MW Pre-phase 1 Solar Project at NSP’s Shiroro power plant.
NSP holds two hydro concessions, including the 600MW Shiroro Hydroelectric Power Plant and the 30MW Gurara Hydroelectric Power Plant. It generates about eight per cent of Nigeria’s power supply with a covering more than 10 million people.
The Federal Government had in 2013 transferred its rights to operate, restore and maintain the hydroelectric power production facilities located at the Shiroro Reservoir and the related hydro property of the 600MW Shiroro Hydro Electric Power Plant to NSP through a 30-year concession agreement.
Last May, the Federal Government also transferred its rights to operate, restore and maintain the 30MW Gurara Hydro Electric Power Plant to NSP through a 25-year concession agreement.
NSP plans to increase its power production to 10 per cent of Nigeria’s power. Its Gurara plant is undergoing rehabilitation and expected to come on stream by first quarter 2022.
The launch of the NSP bond showed early activities in the Nigerian debt market. Nigerian governments and companies had raised more than N2.3 trillion in new capital from the capital market in 2020. Despite the COVID-19 pandemic, the capital market had in 2020 provided critical funding in debts and equities to governments and companies.
A breakdown of the fund-raising entities last year showed five broad categories – Federal Government, state governments, quoted companies, fund management finds and special purpose vehicles (SPVs).
These included the Federal Government of Nigeria, sub-national issuances by the Ondo State Government, debts and equities raising by several quoted companies, including Dangote Cement, Flour Mills of Nigeria, Consolidated Hallmark Insurance, Coronation Insurance, formerly Wapic Insurance, International Breweries, and Golden Guinea Breweries.
Other corporate issuers included Abbey Mortgage Bank, C & I Leasing, UACN Property Development Company (UPDC), United Capital, AIICO Insurance, Red Star Express, and Interswitch Africa One. Investment management companies such as ARM Investment Managers and Meristem Wealth Management also launched new collective investment schemes.
The market, particularly, provided innovative finance through SPVs to support key infrastructural development and corporate restructuring. These included issuances such as Axxela Funding 1, LAPO MFB SPV, FBNQ MB Funding SPV, and Primero BRT Securitisation SPV.