Lagos Free Zone debuts 10.5bn naira series 1 20-year bond

Lagos Free Zone Company in Nigeria has made waves in the corporate market with the issuance of a groundbreaking 10.5 billion naira 20-year series one senior corporate bond, approved by the Securities and Exchange Commission (SEC). This infrastructure bond marks a significant moment in Nigeria's debt capital market history, as it is the first 20-year bond issued by a corporate entity in the country. The bond paves the way for long-term financing for infrastructure projects, addressing a gap that previously limited funding to shorter durations of 5 to 10 years. The move to introduce long-term financing through local debt capital aligns assets and liabilities for large-scale infrastructure projects with extended decision periods, fostering growth and development in the industrial sector. The success of this transaction underscores investor confidence, with participation from patient fund managers and institutional investors demonstrating strong support for the initiative. Ashish Khemka, Chief Financial Officer of Lagos Free Zone Company, highlighted the significance of the bond issuance in an interview with CNBC Africa. Khemka emphasized that the milestone event opens avenues for infrastructure development and enhances the financial landscape for long-term projects in Nigeria. The 10.5 billion naira bond represents a strategic move to attract capital and stimulate growth within the industrial hub being developed by the Lagos Free Zone Company. The Lagos Free Zone, Nigeria's first private free zone, is a key player in the country's economic landscape. Developed and promoted by Tola Ram, a Singapore-based conglomerate with a strong presence in Nigeria, the zone hosts prominent global brands such as Kellogg's, Colgate-Palmolive, and Carlsberg Foods. The zone is also home to the Lekki Deep Sea Port, a significant project valued at $1.2 billion. With an impressive lineup of multinational companies and a track record of 12 to 13 years of operational success, the Lagos Free Zone stands out as a thriving business hub with diverse industry presence. In the wake of global challenges posed by the COVID-19 pandemic, attracting foreign direct investment (FDI) remains a priority for Nigeria. The Lagos Free Zone offers a compelling investment destination, with an attractive industrial park equipped to accommodate multinational companies across various sectors. Despite a downturn in global capital formation, Nigeria has seen a steady inflow of FDI, indicating a growing appetite for investments in emerging markets. By providing a conducive environment and robust infrastructure, the Lagos Free Zone aims to further boost FDI inflows and create opportunities for sustainable economic growth. The strategic positioning of the Lagos Free Zone reflects a mixed-use model, comprising industrial, logistics, and real estate segments. The industrial sector forms the largest portion of the zone, encompassing industries like food and beverages, pharmaceuticals, chemicals, engineering, and more. Additionally, logistics infrastructure supports the operations of the Lekki Deep Sea Port, while real estate development offers commercial and residential spaces to foster a vibrant live-work culture within the zone. Looking ahead, the Lagos Free Zone Company anticipates significant investment inflows in the coming years, with committed investments already totaling $2.1 billion. The company projects a substantial increase in investments, expecting to reach approximately $5 billion as the zone undergoes further development over the next decade. By attracting investments across diverse sectors and fostering a conducive business environment, the Lagos Free Zone aims to emerge as a key player in Nigeria's industrial landscape and contribute to sustainable economic development. In conclusion, free zones play a vital role in driving economic growth and attracting both foreign and domestic investments. With the success of the 20-year bond issuance, Lagos Free Zone Company sets a precedent for long-term financing in Nigeria's corporate market, signaling a new era of infrastructure development and investor confidence. By leveraging strategic partnerships, robust infrastructure, and credit enhancements, the company is well-positioned to achieve its investment targets and propel growth in the industrial sector amid challenging global conditions.