Purple concludes N5bn sukuk bonds issue, achieves 100% subscription

NGX lists FG N130bn Sukuk bond

Purple Urban Limited, a member of the Purple Group, has announced that it has concluded its Sukuk Bond privately issued to the investing public raising N5 billion.

The company in a statement said the bond issue, which opened and closed recently, was 100 per cent subscribed.

“With a maturity date of 1st September 2026, the Sukuk Bonds were issued to finance the construction of 94 out of 112 housing units in an urban residential development of mainly 4 bedroom semi-detached maisonettes and penthouses, as well as 2, 3 and 4 bedroom apartments just off Freedom Way in Lekki Phase 1, Lagos, Nigeria, “the company said.

It added that the lead arranger of the bond issue was CardinalStone Partners Limited, while Marble Capital Limited acted as a Joint Shariah Adviser alongside One17 Capital Limited.

“The Purple Urban Sukuk follows the Sukuk Al-Ijarah concept. The Sukuk Al-Ijarah (Lease) is a lease agreement in which the owner of a property transfers the legal right to use and derive profit from the property to another person, for an agreed period, at an agreed consideration. In this instance, for a 5 year period with an option for the lessee (musta’jir) to pay up the consideration (Ujrah) on a fixed term at an agreed return, “it added.

Commenting, the Chief Executive Officer, Purple Group, Mr. Olaide Agboola, said: “The Sukuk gave an avenue for alternative funding, which we decided to explore. It’s no secret that the investor market has gone through some shocks with the effect of the global pandemic and other perceptions affecting investor confidence. We found that the asset-backed nature and the flexibility of the Sukuk structure especially for real estate gave us the impetus to issue a Sukuk that would ensure investor comfort and confidence.

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“As at today, it was 100 per cent subscribed, and the order book met our expectations. Considering the current economic climate, we think the Sukuk performed extremely well, as it gave investors an avenue to release funds for a world-class real estate development where the instrument can be properly secured.”

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He added, “As part of our upcoming fundraising activities, Purple is undertaking a series of equity issues commencing with a rights issue, private placement and considering its options in the public market via in an initial public offer through a combination of preference shares and ordinary shares under a REICO structure, as permissible from a regulatory perspective. Both of which we expect to be shariah-compliant amongst other shariah compliant capital market instruments.”

The successful Purple Urban Sukuk Issue, he said, has further deepened the roots of the Shariah-compliant instruments in the enhancement and beautification of the Nigerian property development space.

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“Similar to bonds in Western finance, Sukuk is an Islamic financial certificate that complies with Islamic religious law commonly known as Sharia. Since the traditional Western interest-paying bond structure is not permissible, the issuer of a Sukuk essentially sells an investor group a certificate and then uses the proceeds to purchase an asset that the investor group has a direct or partial ownership interest in.

“The issuer must also make a contractual promise to buy back the bond at a future date at par value. It is a sharia-compliant bond-like instrument used in Islamic finance and it involves a direct asset ownership interest, while bonds are indirect interest-bearing debt obligations, “he said.


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