FOCUS Capital, a subsidiary of the Focus Group of companies has launched a new product in Zambia to boost road infrastructure development known as ‘Ulendo’.
According to Group business development manager, Anne Kaluba, the objective of Ulendo was to address the challenges faced by local road contractors.
Ms Kaluba said the Ulendo product intended to raise K6.5 billion by issuing Bonds to the public as well as corporate investors.
Ulendo was excited to finally make open an offer that is the first of its kind in the Zambian Capital Market. The rationale for undertaking the initiative include the following:-
1. To support the speedy development and growth of the Zambian contractor base in order to empower Zambian road contractors to increase the uptake of road contracts issued by RDA/GRZ;
2. To enable Zambian Road Contractors access ‘collateral free’ financing given the challenges they currently face in borrowing from traditional sources of financing;
3. To build capacity for the local Zambian Contractors by improving access to capital and equipment;
4. To enhance the performance of road development in terms of quality and completion timelines;
5. To increase liquidity in the market by reducing capital flight in the sector and in return contributing to the GDP.
Speaking at the centre Deputy Group Chief Executive of Mr. George Mubipe indicated that this program will benefit both investors and the Government alike due to its unique responsive nature to challenges faced in the market.
“Ulendo RINP is exclusively structured to address the challenges faced by local road contractors in financing contracts and completing them within the stipulated time.
Ulendo RINP will make it possible for contractors to increase their liquidity thereby giving them a better chance to compete for road contracts with larger and international contractors. We encourage all corporate and individual investors to be a part of it.” Said Mr. Mubipe.
Individual investors will also be able to invest in the Road Infrastructure Note Program with a minimum requirement of K1,000 giving a return of up to 24% per annum on kwacha investments and up to 7% per annum for dollar investments to be paid back in semi-annual payments. He said Ulendo has secured investment grade credit enhancements in the form of Default Risk Cover/ Sub-Sovereign Risk Cover from the Africa Trade Insurance Agency (ATI), rated A stable by S&P, and Liquidity Guarantee from Guarantco rated AA- by Fitch. These credit enhancements make the issue enjoy the combined credit rating of the Guarantors which significantly exceeds the credit quality of most of the issues in the market and yet offers very competitive yields.
The Issuer has also secured firm commitment from Norsad Finance Limited as an anchor investor who will invest up to 30% of the tranche 1 amount. Norsad’s participation as an anchor investor is a testimony to the quality of the issue and should provide a level of comfort to all would be investors.
The offer will be open for a period of 30 days from the 27th October to the 27th November 2015. The Program has been registered with the Securities and Exchange Commission of Zambia and has been approved for listing on the Lusaka Stock Exchange. It has also been enhanced by international guarantors against possible payment defaults and liquidity risks.