Lagos, Nigeria, 22, May 2016 – United Capital Plc, one of Africa’s leading investment banking and financial services Groups has, in partnership with United Bank for Africa (UBA) Plc, executed another landmark transaction in the power sector. The firm served as advisers on the structure by which the Nigerian Bulk Electricity Trading Company Plc (“NBET”) will now be able to provide Bank Guarantees to Generation Companies (“GenCos”) in line with the provisions of the Power Purchase Agreements and Power Purchase Activation Agreements executed between NBET and the GenCos.
The arrangement involves the assignment of Bank Guarantees, valued at N50.59 billion, to the GenCos. The Bank Guarantees will be held by Security Trustees, United Capital Trustees Limited – the appointed Security Trustee and will serve as payment guarantee to the GenCos.
“The transaction enables the Federal Government of Nigeria to demonstrate it’s clear commitment to the far-reaching power sector reform, ensuring that the entire value chain runs efficiently. It underscores the importance of developing a well structured power sector that is fair and equally beneficial to the interests of consumers, generators, and distributors,” stated Oluwatoyin Sanni, Group CEO, United Capital Plc.
United Capital Plc innovated and advised on an efficient structure to facilitate the issuance of payment security in the form of Bank Guarantees to the GenCos on behalf of NBET. The structure involved the re-assignment of Bank Guarantees provided by Distribution Companies to NBET by issuing them to the GenCos, avoiding the need to issue fresh Bank Guarantees. Advantages of the structure include speed/ease of execution, cost efficiency and risk mitigation by providing recourse to an alternative source of payment for the GenCos to the satisfaction of all parties.
The structure enhances the existing payment security to the GenCos and payments received will enable GenCos to fund working capital and raise capital expenditure towards upgrading their operations and increasing capacity, to meet the demands of the Nigerian economy.
The structure was achieved through a successful collaboration between UBA Plc and United Capital Plc. UBA brings its reputation as a financial powerhouse and a leader in the financial services sector, not just in Nigeria but it all over Africa to the transaction.
Attendees at Friday’s signing ceremony included Kennedy Uzoka, in-coming GMD, UBA Plc; Oluwatoyin Sanni, Group CEO, United Capital Plc, Rumundaka Wonodi, MD/CEO, NBET; Itohan Ehiede, Treasurer, NBET; Boma Benebo, Deputy Head of Infrastructure & Development Finance, Central Bank of Nigeria; as well as representatives of the various GenCos.
United Capital Plc remains committed to achieving its goal of building Africa’s Leading Investment Banking and Financial Services Group and to the continued delivery of service excellence across all of its business units in pursuit of this strategic objectives.
