Agric firm raises N15 billion bonds, records 113% oversubscription of first bond issue

TAK Agro Plc, an agro-allied company has raised the sum of N15 billion senior secured bonds for the purpose of transporting fertilizer and food grains across Nigeria.

The bonds issue is the first in the agricultural value chain market and was raised with the help of Planet Capital, an investment-banking boutique registered with the Securities and Exchange Commission (SEC)

Why this matters

According to the Managing Director of the Group, Mr Chuma Henry Maduekwe, the company is engaged in the movement of fertilizer raw materials, such as imported phosphate and potash to various fertilizer blending plants under the Presidential Fertiliser Initiative (PFI). The company makes an estimation of 34,000 truck trips of fertilizer in six months.

However, the company has no truck of its own and relies on third-party transporters to meet its requirement, hence the need for bonds raise to boost its logistics arm.

What we are building is a Pan-African agriculture platform. However, during the process of delivering fertilizers to working with a lot of agric related companies to enhance crop yield, it was clear that we needed to control our logistics.

“Prior to now, we listed third party logistics companies to support our operations but with what we are trying to do, it is clear to us that there is a need for us to control that end of the chain. We are coming out with the first bond to acquire the first 250 trucks. In the first instance, from our calculation, we required 1000 trucks for our immediate operations. As a first step, we are coming to the market to acquire the first 250 trucks and we will add to that in the subsequent years,” he said.

Chairman, TAK Agro Plc, Mr Thomas Etuh could not hide his excitement about the bond raise. Giving an overview of the company, he noted that the company began to trade commodities like salt before moving into agro-allied products like fertilizers.

TAK Group wants to build a Pan-African integrated agric solution. It started by trading in salts, fertilizers and cotton. Today, we are the largest producer of NPK fertilizer in the country with an installed capacity of 3 million MT and demand in the country is 4 million. All these cannot be achieved because of lack of logistics. we all know the state of the roads and situation of the railways.

“In six months, the group moves raw materials of fertilizers to various blending points and requires 34,000 truck trips in 6 months. This means we move 1 million metric tonnes of raw materials. If we go to our installed capacity, we are talking about 100,000 truck trips a year. As the MD said, we are starting with 250, our requirement is 2,000,” Etuk said.

What you should know

Etuk said that the bonds were oversubscribed by 113%. He noted that the fertilizer company would soon launch its Initial Public Offering (IPO) by the second quarter of next year. In addition, the Chairman boasted of some of the group’s achievements which include the acquisition of silos across the country in Abuja, Kaduna, Jigawa, Kwara and Kebbi with 2061000 metric tonnes capacity to store grains. He hinted at another bond raise of N50 billion which is soon to come.

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