Oando seals underwriting pact with Afreximbank’s insurance subsidiary

Oando Plc has entered into a strategic partnership with AfrexInsure, the specialty insurance subsidiary of African Export-Import Bank (Afreximbank), the bank disclosed in a statement issued in Cairo on Monday.

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The deal allows AfrexInsure to provide critical risk management solutions to Oando by ensuring that the lender’s investment in the energy company’s Nigerian operations is adequately protected.

Afreximbank stated that the synergy will boost Oando’s resilience, promote sustainable energy development and strengthen Afreximbank’s commitment to economic growth and regional stability in the trade ecosystem through mitigation of operational and geopolitical risks.

“This strategic collaboration between Oando and AfrexInsure will help promote local content in Africa’s oil and gas sector,” said Jonas Mushosho, CEO and principal officer of AfrexInsure.

“The collaboration, which also underscores a shared commitment aimed at fostering economic empowerment and contributing to the sustainable development of Africa’s natural resources, will also strengthen the African insurance sector by retaining premium flows within the continent and fostering Africa’s financial sustainability,” he added.

Afreximbank’s business relationship with Oando has been marked by a couple of key financing initiatives.

Last August, the lender facilitated a $650 million financing of Oando’s full acquisition of the Nigerian Agip Oil Company from Eni. The transaction is anticipated to help scale the company’s production capacity fivefold to 100,000 barrels of oil equivalent per day.

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In June 2024, Oando through its subsidiary Oando Trading contributed $550 million to a $925 million accordion facility arranged by Afreximbank, enabling it to participate in a $3.3 billion structured crude oil-backed finance facility called “Project Gazelle,” which was sponsored by the Nigerian National Petroleum Company Limited.

An accordion allows a borrower to increase the maximum limit permitted on a loan facility or add a term loan to an existing loan agreement.

“We have a longstanding relationship with Afreximbank where we have seen the Bank support our vision for energy in Africa, not only with essential financing but also with invaluable guidance and advisory support,” Wale Tinubu, Oando’s chief executive, said.

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“Following our recent acquisition, a tailored risk identification and mitigation approach is paramount. We are confident that our collaboration with AfrexInsure will provide the necessary oversight to ensure both the adequacy and comprehensiveness of our risk management strategy,” he added.

Oando is listed in Lagos as well as in Johannesburg. The company reported an 8.6 per cent jump in net profit to N65.5 billion in 2024.