The maiden N10 billion bond issue by Nova Merchant Bank was oversubscribed by over 300 per cent, its Chief Financial Officer, Ifeanyi Chukwuonye, has disclosed.
Mr Chukwuonye said despite the negative impact of COVID-19 on the global economy, including Nigeria’s, investors still swooped on the seven-year subordinated unsecured bond issuance.
He said the decision by the management of the bank to invest in the bond issue was part of its N50 billion debt issuance programme.
“The N10 billion bond issue was in line with the corporate strategy of the bank to raise long term funding to create long-term corporate loans,” he said.
The bond issue, which was restricted to qualified financial institutions and high net worth individuals, was the first in the series of bond issues conceived as part of the bank’s strategy to grow its balance sheet amidst the ravaging impact of the COVID-19 pandemic.
Mr Chukwuonye who said the bank was not deterred by the COVID-19 pandemic, said in the midst of the prevailing turbulent situation in the global economy, it identified opportunities it decided to exploit.
He said the response of the market to the opportunities was not only receptive, but was also impressive.
With the performance of the bank with the latest issue, Mr Chukwuonye said the bank, which is barely three years in existence, was already contemplating going back to the market any time soon for more funding.
“The issuance is the first in the series as part of the bank’s strategy to grow its balance sheet. It is another addition to the catalogue of successes as a bank,” he said.
He said the proceeds of the bond issuance would be used to create long-term corporate loans to build a more efficient balance sheet and increase the earning capacity of the bank’s assets
Highlighting the bank’s performance within the short period it has been in existence, Mr Chukwuonye said its impressive performance numbers were some of the factors that convinced investors to take their investment decisions.
Since becoming operational, he said the bank has remained “very profitable”, with its gross earnings growing by 121 per cent in 2017 and 2018 financial year, and about 111 per cent in 2018 and 2019.
Also, he said profit after tax grew by 43 per cent between 2018 and 2019, while total assets grew by 156 per cent in the corresponding period.
The CFO said the debt-income ratio of the bank has considerably come down consistently for the last three years as a demonstration of the bank’s management operating efficiency.
He expressed confidence of the bank’s future, saying it has high prospects of better performance.
The bank, he noted, has already taken steps to ensure it takes its place in the merchant banking space in Nigeria, adding that its long term goal was to build a viable and sustainable merchant banking institution that would be a pride of its investors
“The bond issuance is part of the bank’s strategy to realise our long term goal,” he said.
Nova Merchant Bank, which focuses on wholesale and investment banking, is owned by Nigerian and foreign institutional investors interested in financial services and the real sector.
Its services include Corporate Banking, Investment Banking, Advisory Services, Securities, Wealth & Asset Management targeted at private and public sector clients in addition to private individuals in the Oil & Gas sector, Commodity & Agricultural business, Utility & Infrastructure, Fast Moving Consumer Goods, Trade & Services and Financial Institutions.