Shelter Afrique eyes Ksh.55 billion from NSE corporate debt market

Shelter Afrique eyes Ksh.55 billion from NSE corporate debt market

Pan-African based affordable housing firm Shelter Afrique says it plans to raise Ksh.55 billion ($500 million) through the Nairobi Securities Exchange (NSE) corporate bond segment.

This as part of the firm’s return to the debt market after clearing its outstanding commercial debt which has handed it leverage to underwrite new debt.

Shelter Afrique plans to raise a combined Ksh.137.5 billion ($1.25 billion) in local currency bonds across the region by the end of this year.

In East Africa, the Ksh.55 billion will be raised via a corporate bond to be listed on the NSE but which will be open to regional investors.

Shelter Afrique will eye a similar amount from West Africa with the respective corporate bond being listed in Nigeria while the balance of Ksh.27.5 billion ($250 million) will be mobilized from French speaking African nations.

On Tuesday, the firm announced the clearance of commercial debt owed to eight lenders.

“Despite Debt Restructuring Agreement giving us a window to make full loan repayment by June 2024, we successfully repaid all the loans by June 2021. This was possible due to the new structures we put in place to deal with bad debts and loan recoveries as part of our turnaround plan,” Shelter Afrique Group Managing Director and CEO Andrew Chimphondah said.

“This now affords us the ability to underwrite new business and debt without constraints and legacy matters. For instance, based on our current Equity Capital base of $155 million and a debt-equity ratio of 0%, we can instantly raise new debt of up to $465 million.”

Shelter Afrique has paid up Ksh.20.5 billion ($186 million) including accrued interest owed to the African Development Bank (AFDB), Agence Française de Development (AFD), Commercial Bank of Africa, European Investment Bank (EIB), German KFW, Ghana International Bank, CFA-Banque Ouest Africaine de Development, and Islamic Corporation for Development.

The company has also repaid a bond floated on the NSE between 2013 and 2018.

The potential corporate bond on the NSE will serve to replenish the struggling corporate debt segment in the market which has been at pains to onboard new listings in recent years for a variety of reasons.

According to the latest data from the Capital Markets Authority (CMA), the segment had a mere seven listings valued at Ksh.23.9 billion at the end of June 2021.