Geregu Power Plc, a top-performing power-generating company led by Nigerian billionaire Femi Otedola, has completed its N40-billion ($96.3 million) unsecured corporate bond issuance as it prepares to expand its infrastructure and capacity through the strategic acquisition of power generation plants in the sector.
The $96.3-million unsecured corporate bond issuance is the largest corporate bond ever issued in the Nigerian power sector. It is also the first installment of Geregu Power’s N100-billion ($240.5 million) bond issuance program, as the company works to strengthen its capital structure and support its strategic expansion plans.
The medium-term facility, raised under the group’s multi-instrument debt-funding program, was oversubscribed by capital market participants during the book-building process and closed at a fixed interest rate of 14.5 percent for a term of seven years.
The net proceeds of the $96.3-million bond issuance, which will be serviced semi-annually, will be used to fund the company’s planned acquisition of the 434-megawatt Geregu Power Plant, while a portion of the proceeds will be utilized to cover the company’s daily working capital requirements.
Geregu Power CEO Akin Akinfemiwa commented on the transaction, stating: “The resounding success of our debut bond offer demonstrates implicit confidence in our business by the investment community in our quest to increase capacity and contribute our own quota to the Nigerian Electricity Supply Industry.”
He went on to add that the funds will be used to help the company achieve its long-term corporate goals of market leadership, innovation, and adherence to the highest environmental, social, and corporate governance standards.
Geregu Power, which began operations in 2007, is a spin-off subsidiary of the now-defunct Power Holding Company of Nigeria.
The power generation company was acquired in 2013 by Otedola through one of his companies, Amperion Power Distribution Company, following the privatization of the power sector.
Under Otedola’s ownership, Geregu has grown into one of Nigeria’s largest power-generating enterprises, using gas turbines as a clean energy source to create power.
In 2019, Otedola announced plans to shift attention to power generation, with a projected investment of up to $1 billion in the power-generating company in a move to capitalize on the business’s gains.