Axxela Raises N16.4bn in Bond Issuance to Fund Long-term Gas Infrastructure Projects

Peter Uzoho

Axxela Limited, a major sub-Saharan African gas and power portfolio company, has announced the completion of its N15 billion Series 1 Bond Issuance where it raised N16.4 billion to be deployed towards funding its existing and future gas distribution infrastructure projects.
The bond, according to Axxela, was issued under its newly established N50 billion Multi-Instrument Issuance Programme, and was well received and achieved an oversubscription at 109 per cent to close at N16.4 billion.

The midstream gas company explained that it accomplished the financial milestone despite issuing the bond during challenging economic conditions in the country, with rising interest rates and limited market liquidity.
The offer, it noted, attracted strong investor interest from a diverse investment group, including Pension Fund Administrators, Asset Managers, and High-Net-Worth Individuals, underscoring robust confidence in its financial prospects and market position.
The bond issuance will enable Axxela to fund its long-term capital expenditures, manage its weighted average cost of capital, and diversify its funding sources while meeting the company’s strategic objectives.

The company said that Stanbic IBTC Capital, acting as the Lead Issuing House for the Bond Issue alongside seven Joint Issuing Houses, played a pivotal role in the transaction, with Stanbic IBTC Bank serving as the transaction bank.
Commenting on the fundraising during the signing ceremony in Lagos, Axxela Limited’s Chief Executive Officer, Mr. Bolaji Osunsanya, thanked the Nigerian capital market investors for their sustained confidence in the Axxela brand, the organisation’s financial excellence, and its long-term strategic market aspirations.
“In 2020, our inaugural bond issuance was well oversubscribed, leading to an N11.5 billion closing against the N10 billion target. Once again, we have received an oversubscription with this issuance, raising N16.4bn against the N15bn prospectus.

“This is a significant indicator of increasing investor confidence in our company’s reputation, brand, and performance,” Osunsanya said.
According to him, the milestone emphasises the necessary symbiosis between private entities and debt capital markets, as it enables Axxela to pursue its multi-pronged growth strategy of optimising operations and assets, expanding the company’s footprint, and revolutionising the energy sector.
Osunsanya added: “The bond proceeds will support the development of our growth projects, signifying the importance of local and international capital markets in the development of critical infrastructure.
“We believe that now is the time to forge deeper collaborations to assess the right investment that would aid the much-needed infrastructure for the sector and Nigeria”.

He said he was optimistic about Axxela’s upward growth trajectory as global trends in the future energy mix showed a continued shift toward cleaner and more affordable energy solutions.

The chief executive officer emphasised that with natural gas taking centre stage in the federal government’s energy transition agenda, Axxela is uniquely positioned as the partner of choice to actualise large-scale projects within the pipeline, virtual pipeline, gas processing, last mile distribution and embedded power solutions.

In his remarks, the Chief Financial Officer, Axxela Limited, Mr. Timothy Ononiwu, said: “We are grateful for the success of the transaction which speaks to the investors’ recognition of Axxela’s operating and financial performance over the years and the significant growth prospects across our value chain.

“We will continue to explore opportunities to diversify our funding sources and optimise our funding structure towards achieving our financial objectives. We appreciate the immense support from our advisors who guided us through this process and the investors who still believe in our story.”

The firm’s operations span the natural gas value chain, including processing, transmission, distribution, trading, power generation and distribution.