PETROSOL Platinum Energy PLC has raised GH¢100 million through its maiden corporate bond issuance after investor demand reached GH¢178.07 million, nearly twice the amount the indigenous oil marketing company sought.
The strong demand was recorded during the company’s bookbuild ahead of the listing of its Series 1 and Series 2 Notes on the Ghana Fixed Income Market (GFIM) of the Ghana Stock Exchange (GSE).
The GH¢100 million issue formed the first tranche of PETROSOL’s GH¢200 million Note Issuance Programme approved by the Securities and Exchange Commission and the GSE.
The four-year Series 1 Note attracted GH¢114.28 million in bids against a GH¢50 million target, representing 229% subscription from 66 underlying investor clients.
The five-year Series 2 Note also exceeded its target, attracting GH¢63.8 million in bids against GH¢50 million, representing 128% subscription from 18 investor clients.
Funding expansion
PETROSOL said the funds will be used primarily to strengthen working capital and allow the company to shift more of its fuel procurement from credit to cash purchases.
The move is expected to reduce its cost of sales, improve margins and potentially create room for better value for consumers.
Part of the funds will also support the expansion of PETROSOL’s retail network as the company seeks to increase its presence across Ghana.
The company plans to return to the capital market to raise the remaining GH¢100 million under the programme as it implements its strategic expansion plans.
PETROSOL currently operates 109 fuel stations across 13 regions, up from four stations in 2014. The company supplies petrol, diesel, LPG and lubricants to retail and corporate customers.
Capital market milestone
The listing marks PETROSOL’s entry into Ghana’s formal capital markets and comes as efforts intensify to deepen the domestic market beyond government securities.
The company said its move to the bond market followed almost three years of preparations, including the restructuring of its board, appointment of independent non-executive directors, conversion to a public limited liability company and adoption of full International Financial Reporting Standards.
It also established board committees covering audit and risk, remuneration and nominations.
Daniel Acheampong, Chairman of PETROSOL, said the strong subscription demonstrated that investors had recognised the company’s efforts to strengthen its governance and reporting standards.
“We are proud to bring PETROSOL to the Ghana Fixed Income Market of the Ghana Stock Exchange on the strength of that credibility,” he said.
Chief Executive Officer Michael Bozumbil said accessing the capital market represented the next stage in the company’s growth strategy.
“Accessing the capital market was always part of our long-term plan, not as a shortcut, but as the natural next step for a business that has proven it can grow sustainably and responsibly,” he said.
Trading in the Series 1 and Series 2 Notes begins on the GFIM, with settlement, registry and depository services provided by the Central Securities Depository (GH) Ltd.
The transaction was arranged by Absa Bank Ghana and Databank Brokerage, with KPMG as reporting accountants, Fidelity Bank Ghana as note trustee and Kimathi & Partners as legal advisers.
