The Consolidated Bank Ghana (CBG) has made history, as the first local bank to raise substantial funding from the stock market to support an indigenous business, Kasapreko Public Limited Company (PLC).
The commercial bank is raising the financial assistance for Kasapreko PLC, up to the tune of GH¢600 million from the Ghana Stock Exchange, at a fixed lending rate of 26 per cent for a period of three years.
The amount is expected to be released in tranches for three years.
The support will give Kasapreko the opportunity to leverage on its production capacity and capability.
This would also give the company competitive advantage, as it intended to go continental with the opportunities available on the African Continental Free trade Area (AfCTA).
Daniel Addo, Managing Director of CBG, at a presser in Accra, this week, described the partnership with Kasapreko as novel, for a local bank to raise funds from the stock market to support an indigenous manufacturer.
He said: “CBG worked with key stakeholders in the financial industry to raise medium-term funding at a cost significantly lower that Ghana Reference Rate (GRR), for borrowing in this market.
“This transaction is another addition to the issuances on the corporate bond market and I’m supremely confident that it will be the spark that ignites growth in this market segment.”
According to him, although the bank acknowledges the risk associated with funding Small and Medium size Enterprise (SMEs), it is determined to break from the past and give SMEs a fresh head start.
“The risk may be elevated, but our business is the business of managing risk, not fleeing from risk. As the environment changes, it is incumbent on us to re-examine our establishment paradigms, question our perception of risk and develop financing structures that meet the evolving needs of our customers,” he stressed.
To accomplish this, he explained that issuance is structured as a three-year senior unsecured note, with floating rate coupon and bullet repayment of principal at maturity.
Furthermore, the Ghana Stock Exchange will ensure price discovery for note holders and potential buyers were identified as a positive step towards deepening the financial markets.
Mr. Addo added that the funding would also diversify Kasapreko funding mix and optimise the maturity structure of its debt funding.
Richard Adjei, MD of Kasapreko PLC, was grateful for the partnership and hoped it would go a long way to support their operations, particularly the financing scheme from the Ghana Stock Exchange being relatively cheaper, and a one that falls under patient capital.
He said Kasapreko has assurance from CBG that it could access funding from other sources, and this is will diversify funding from the traditional banks in a more cheaper and sustainable way.
Mr Adjei hoped the GH¢150 million will support its production capacity and enhance its trade under the African Continental Free Trade Area (AfCFTA).
He added, “With this development, we’ll be able to get more affordable products to the market and contribute to support communities in Ghana and beyond.”
