The Consolidated Bank Ghana (CBG) and other financial institutions have supported Kasapreko PLC, an alcoholic and non-alcoholic beverage company, in successfully raising a total of GH¢600 million through a bond issuance with a five-year maturity period from the Ghana Fixed Income Market of the Ghana Stock Exchange (GSE).
The first tranche of GH¢150 million was issued yesterday and was primarily subscribed by institutional investors such as fund managers, with a three-year tenor.
It was over 100% subscribed, making it the single largest capital raise on the Ghana Fixed Income Market.
Tranche one has an issue date of January 29, 2024, and a maturity date of January 29, 2027.
In subsequent issuances of the remaining GH¢450 million, there will be opportunities for individual investors to participate.
Kasapreko secured the capital at a rate of 26%, compared to the typical bank loan rate, which would include the Ghana Reference Rate (GRR) of 31% plus a spread of about three basis points, resulting in a total interest of 34%.
This makes the bond option chosen by Kasapreko nine percent cheaper.
Additionally, while the GRR fluctuates, the bond offers a fixed rate for the duration of the facility, providing stability for financial planning.
The funding raised will be utilized to refinance existing debt, thereby reducing the debt burden on the company.
It will also be allocated for capital expenditure and to support the working capital requirements of Kasapreko.
CBG collaborated with key stakeholders in the financial industry to facilitate the fundraising for Kasapreko.
Speaking at the listing ceremony in Accra yesterday, the Managing Director of CBG, Mr. Daniel Wilson Addo, emphasized the bank’s role in enabling local corporates like Kasapreko to access funding for their growth and expansion.
Mr. Addo highlighted CBG’s commitment to the SME sector, emphasizing the importance of addressing the challenge of SME financing.
He stated, “The challenge of SME financing is one that we must address head-on, and the first step is to break from the past and jettison the notion that the risks are elevated in the SME segment.
“The risks may be elevated, but our business is the business of managing risk, not fleeing from risk.”
While CBG is working on similar transactions for other companies, Mr. Addo did not disclose specific names, citing that it is too early to do so.
Managing Director of Kasapreko PLC, Mr. Richard Adjei, stated that this landmark move underscores Kasapreko’s commitment to growth and operational excellence within Ghana’s vibrant economic landscape.
He expressed confidence that the bond issuance would accelerate the company’s growth trajectory, further solidifying its position as a beacon of excellence within the beverage industry.
Adjei emphasized, “As the first manufacturing company to raise a corporate bond in Ghana, we are thrilled to embark on this momentous journey of listing our GH¢600 million bond and grateful for the confidence the market has shown in Kasapreko PLC.”
He highlighted that this strategic move not only demonstrates their commitment to sustainable growth but also signifies their confidence in Ghana’s vibrant economic ecosystem.
The listing of the GH¢600 million bond on the Ghana Fixed Income Market serves as a testament to Kasapreko’s dedication to fostering economic development, job creation, and value addition within Ghana.
Adjei emphasized Kasapreko PLC’s mission to deliver unparalleled quality and excellence to consumers worldwide as the company continues to explore new territories and push the boundaries of innovation.
Adjei explained that the bond provides patient capital, generating more money without requiring early repayment of the principal.
Additionally, he noted that the cost is cheaper than traditional banks, making Kasapreko’s operations more affordable, which would reflect in product pricing.
Moreover, he highlighted that the bond presents an opportunity to export products and generate foreign exchange to support Ghana’s balance of payments.
Regarding the African Continental Free Trade Area (AfCFTA), Adjei sees the bond as a great opportunity for Ghanaian businesses to open up and take advantage of the market.
He mentioned Kasapreko’s expansion into Nigeria, Liberia, and Kenya, proudly noting that the company is among the first Ghanaian companies to export to Kenya and South Africa under AfCFTA.
Looking ahead, Adjei disclosed that the capital to be raised in the third and fourth years would determine whether or not they should establish their own factories in other countries as part of their expansion strategy.
He expressed the company’s ambition to become an African giant, making Ghana proud.
Adjei concluded by highlighting Kasapreko’s market share dominance, noting their leading position in the alcoholic beverage sector for the past 10 years, significant presence in the water sector, and strong foothold in the soft drinks category, demonstrating their substantial contribution to various segments of the beverage market.
Managing Director of the Ghana Stock Exchange, Ms. Abena Amoah, expressed delight over Kasapreko’s bold step of raising capital from the stock market, thereby benefiting from the market’s favorable product offerings.
“The good news is that Kasapreko raised the money at a more affordable interest rate than what the market even suggests they should be charged for, which is one of the big advantages,” Ms. Amoah stated.
“Because the money is long-term, it’s patient; when we contribute towards our pensions, we want the money when we go on retirement. So it’s 20-year money, 30-year money, we are dealing with well-run companies.”
