Supranational trade finance bank- African Export-Import Bank (Afreximbank),on Wednesday, opened its shareholding to the investing public with the issuance of Depository Receipts by its Class “D” shares, as it launched a $300m capital raising plan.
The deal is being arranged by SBM Group, a leader in the financial sector in Mauritius, while listing of the Depository Receipts has been approved on the Stock Exchange of Mauritius, subject to raising the funds by the end of September.
It marks the fruition of a unique initiative on which Afreximbank and SBM Group have worked in the last few months and represent a big first for Africa’s equity capital markets. This represents the first time a supranational bank is issuing Depositary Receipts through an African stock exchange.
The Depository Receipts issuance, Afreximbank says is based on the need to enhance its capitalization and significantly narrow the continent’s trade financing gap currently estimated at $120bn annually, and to meet its strategic objective of growing intra-African trade in all regions of the continent, including island economies.
According to Dr. Benedict Oramah, President of Afreximbank, “Mauritius as a premier financial centre in Africa, has a conducive regulatory framework for this innovative equity offering. On the other hand, SBM possesses the competencies, investor contacts, infrastructure and support capabilities for the issuance of the Depository Receipts.”
The Depository Receipts issuance, Afreximbank said in the statement, represents an opportunity to diversify its shareholder base by offering new investors in Africa and beyond, to invest and to strengthen Africa’s premier trade finance institution, whose interventions in its various member countries have created acknowledged developmental impacts across the continent.
In addition, the Depository Receipts would enable Afreximbank increase its permanent source of capital, while offering investors a liquid instrument with strong portfolio diversification effects, Oramah added.
Being a novel issuance in Africa, Afreximbank’s Depository Receipts are expected to further deepen Africa’s equity capital markets, paving the way for similar issuances by other multilaterals.
The statement quoted Kee Chong Li Kwong Wing, Chairman of SBM Holdings Limited as appreciating the privilege for the company “to have been entrusted by Afreximbank to execute such an important transaction. The structuring and issuance of Depository Receipts is an addition to the Group’s portfolio of services, a recognition of our competence and experience, and it reinforces the position of SBM Group and Mauritius as important financial players in the region. It is high time to see Global investors investing in Africa and tap into Africa’s huge potential.
Continuing, Li said, the initiative is an innovation for the financial market, which would “be a model to other countries and financial institutions. Together, Afreximbank and SBM Group are creating opportunities for the reinforcement of trade, investment and development across the African continent and the deepening of Africa’s capital markets.”
Afreximbank’s shareholders are a four-tier mix of public and private entities, with Class “A”, constituted of African states, African central banks and African public institutions; Class “B”, made up of African financial institutions and African private investors; Class “C”, with shares held by non-African investors, mostly international banks and export credit agencies; and Class “D”, under which fully paid shares can be held by any investor.