Development Bank commences  N100b capital raising

Development Bank of Nigeria (DBN) Plc at the weekend opened application for the first tranche under its N100 billion capital raising programme.
DBN is seeking to raise up to N20 billion bond as the debut issuance under the N100 billion medium term note programme aimed at expanding the capital base of the development finance institution promoted by the Federal Government.

The bank is offering Series 1 Fixed Rate Senior Unsecured Bond with a five-year tenor and pricing range of 14.00 per cent and 14.20 per cent. Application list for the offer will close on Friday, June 23, 2023. Minimum subscription is N10 million and thereafter in multiples of N1 million.

The N20 billion bond is being offered through a book building method, a process that allows the issuer to accumulate initial demand and price preferences from investors, especially high networth institutional and individual investors, which form the basis for the final terms and allotments.

 

Offer documents obtained at the weekend indicated that the net proceeds of the N20 billion issue would be used to expand DBN’s capacity to provide funding to micro, small & medium enterprises (MSMEs), in furtherance of its core corporate objective.

According to the documents, the interest rate or coupons on the bond will be paid twice a year while the redemption will be by way of bullet payment at the end of the five-year tenor. The bond will be repaid from the cashflow of the bank.

The documents showed that DBN and the N20 billion bond have been rated Aaa by Agusto and AAA by Global Credit Rating (GCR).

DBN was set up to bridge the gap created by the inability of other development banks, microfinance banks, and commercial banks to satisfy the funding needs of the MSMEs in Nigeria.

The principal objective of the bank is to improve the access of micro, small, and medium enterprises to longer-tenured finance.

The bank plays a focal and catalytic role in providing funding and risk-sharing facilities to MSMEs and small corporates through financial intermediaries.