Wema Bank seeks investors for N25 billion bonds targeting SME

Wema Bank is looking to investors to raise a N25 billion debt needed to scale its Small and Medium Enterprise (SME) business, which as of 2021 made up less than 2 per cent of its capital.

“The Bonds are being issued privately to targeted investors and will not be listed on any Security Exchange,” the bank said in a Tuesday regulatory filing, seen by PREMIUM TIMES.

The fund will similarly help spur growth in the lender’s loan book for its retail and commercial banking operations and strengthen its digitalisation push.

Subscription to the perpetual bond, so named for the reason that it carries no maturity date unlike most bonds, is N1 billion at a minimum, with the interest rate set at 16 per cent.

The security is planned to be in denominations of N1,000, while issuance is expected to be dematerialised under a trust deed, the document said.

Typically irredeemable, bonds of this nature are usually regarded as equity in a different shape.

Wema Bank has stated that the tenor of the instrument will run as long as the bank itself lasts.

However, the lender said it could call the bond if it so decides after a minimum notice of 20 days to such creditors and the bonds trustee, and 60 days at most “subject to the relevant regulatory approvals.”

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New York-based credit ratings agency Fitch in its latest creditworthiness review of Wema Bank released last July affirmed Wema Bank’s Issuer Default Rating at B-. It implies lending to the bank enjoys some margin of safety even though that carries a material risk of default.

Octogenarian billionaire Kensington Adebutu (also known as Baba Ijebu), who came to renown following early success in his lottery business, owns the most stake (28.1 per cent) in Wema Bank through NeemTree Limited.