Nigeria’s Palm Oil Giant Presco Plc Leads with Record-Breaking N100 billion Bond Issuance

Overview

Presco Plc, Nigeria’s leading palm oil producer, has made headlines with its announcement to raise N100 billion in Series 1 of its N150 billion bond program. This marks a historic milestone as the largest corporate bond issuance in Nigeria’s agriculture industry. With a 7-year tenure and an attractive yield range of 23.25% to 23.75%, this strategic move highlights the company’s confidence in Nigeria’s capital markets.

Presco Plc’s Position in the Market

Presco Plc has consistently outperformed its peers, cementing its reputation as a cornerstone of Nigeria’s agricultural sector. Its commitment to sustainable palm oil production has not only bolstered its financial performance but also established it as a leader in promoting environmental stewardship within the industry.

In 2024, Presco recorded one of the highest returns on equity in the country and is projected to achieve triple-digit growth in net profit. These strong fundamentals make the company a compelling choice for both institutional and individual investors.

Strategic Significance of the Bond

The decision to raise N100 billion comes at a time when Nigeria’s capital markets are experiencing a resurgence in confidence. Following a challenging 2024, marked by high-interest rates and reduced corporate bond issuances, Presco’s bold move signals renewed optimism.

The funds raised will likely support the company’s expansion plans, including increased production capacity, investment in technology, and the development of sustainable practices. This aligns with Presco’s long-term vision to strengthen its market dominance and contribute to Nigeria’s agricultural growth.

Industry Context and Implications

Presco’s issuance is set against the backdrop of a growing trend among Nigerian corporations turning to the capital markets to finance large-scale projects. Historically, the agricultural sector has lagged behind others, such as telecoms and manufacturing, in leveraging capital market opportunities. Presco’s bond could inspire other agribusinesses to follow suit, potentially unlocking new avenues for growth in the sector.

Furthermore, the bond program highlights a shift in investor sentiment toward agriculture as a viable and lucrative investment option. Presco’s strong credit ratings—Aa from Agusto & Co. and A- from GCR—reinforce this narrative, showcasing the sector’s potential for stability and profitability.

Comparison to Previous Corporate Bond Issuances

Presco joins an elite league of companies that have successfully raised significant funds through corporate bonds. Notable examples include Dangote Group which in December 2022 raised N112.42 billion in December 2022 under its ₦300 billion Bond Issuance Programme and MTN Nigeria who secured ₦115 billion in September 2022 as part of its ₦200 billion bond issuance program.

While these issuances were driven by infrastructure development and telecom expansion, Presco’s focus on agriculture introduces a new dimension to the capital markets narrative.

The Future of Presco and Nigeria’s Agriculture Sector

Presco’s ambitious move positions it as a beacon of innovation and resilience in Nigeria’s agricultural landscape. By raising funds to scale its operations, the company is well positioned to play an important role in addressing the country’s growing demand for palm oil and other agricultural products.

Moreover, this initiative sets a precedent for how agribusinesses can leverage the capital markets to fund sustainable growth, ultimately contributing to Nigeria’s economic diversification efforts.