AFEX seeks to raise $175m to finance agro-processors in Africa

AFEX, one of Nigeria’s commodity players, says it is seeking to raise $175 million under its bid to provide low-cost financing to agro-processors in Africa.

In a statement on Monday, the commodity exchange firm said the new funding will be raised via asset-backed commercial paper (ABCP).

ABCP is a short-term debt instrument, typically offering investors a competitive 15% return on their investment, and maturity can be up to 270 days.

“AFEX, Nigeria’s leading commodity market player and the country’s leading private sector commodity exchange, today announced the reopening of its $240 million (100 million USD) Asset-Backed Commercial Paper (ABCP). billion naira) to help stabilize the Nigerian agricultural sector by providing agro-processors with low-cost financing to bridge the financing gap between lenders and borrowers,” the statement read.

“Today’s new funding, AFEX’s second in a three-year commercial paper program that commenced in the fourth quarter of 2021, where $65 million (N27 billion) was raised, aims to raise An additional $175 million (N73 billion) for processors unable to borrow commercially. paper markets.

AFEX said it had listed ABCP on ComX, its commodities trading platform, and would engage capital market operators for subscriptions at a set time.

The company said the funds would provide prequalified agro-processors with working capital to buy the products needed for their production processes at an agreed price.

Commenting on the development, Ayodeji Balogun, Managing Director of AFEX, said: “AFEX has a strong track record in bringing distinctively differentiated and innovative financial instruments to the market, and this new asset-backed commercial paper will help bridge the gap between agri-food processors and investors.

“Access to low-risk finance and capital is key to empowering Africa to feed itself. We believe it is important to provide all players in the value chain with the right capital, in terms of opportunity and structure.

“Based on our past performance, we are confident that we will attract even more funding from private investors and, subject to value for money, they will help us secure this $175 million ($73 billion) investment. naira) in Africa’s food security”.

Recently, the company predicted that food products would become more expensive in 2022.

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