WEMA BANK PIONEERS PUBLIC SPV IN NIGERIA

Wema Bank PLC has heralded the use of special purpose vehicles (SPV) companies to raise needed funds from the public through the Nigerian stock exchange.

According to the NSE, the first ever SPV bond issued on behalf of Wema Bank Funding SPV ltd has been quoted on the NSE.

The bond is for N6.295bn at 18.5% fixed rate and 7 year tenor due in 2023.

It is part of N50bn Wema funding SPV debt issuance programme with Qualivest Capital ltd as the sponsor and lead stockbroker while Union Stockbrokers were its joint stockbrokers.

According to Wema Bank CEO,Mr Segun Oloketuyi the fund raised will be used to finance the turnaround of the bank which started in 2000 and has entered  the growth phase.

Its quotation on the market is indeed a milestone because SPVs issued in other climes have their successes like social media giants like Twitter and Pinterest  raising some capital through it, and equally outstanding abuse like the collapse of Towers Financial in 1994 that found its executives paying fines and being sent to jail for fraud.

SPVs are also called special purpose entities (SPEs) or Financial Vehicle corporations.

They are usually set up, like the names suggest, for specific funding or asset ownership purposes isolated deliberately from the parent company, in this case Wema Bank PLC.

They are used in financial engineering to raise needed capital for specific purpose or Start ups or to own particular assets or rights on behalf of sponsoring companies.

For funding, like in the Wema bank case, it allows for funds to be raised in a way that isolates fund providers from bankruptcy risk or to allow access to more funds without disturbing parent company ownership structure.

On the other hand, ownership of some permits and assets of some projects are not transferable in different countries, so SPVs are created to own such assets and rights so such SPV companies can be sold without affecting the assets.


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