While venture capital deals often grab the headlines, a quieter but powerful financial engine is revving up in Nigeria. Tech companies, from payment giants to digital lenders, are increasingly turning to the local public debt market to raise billions of naira. This isn’t just about finding alternative cash; it’s a sign of a maturing ecosystem where a sophisticated network of banks, brokers, and a dedicated exchange provides a viable path to scale, often with less ownership dilution than traditional VC rounds.

This move towards corporate bonds and commercial papers is fueled by companies with predictable revenue streams seeking capital for expansion. Let’s look at the machinery and the key players making it all happen.

The Marketplace: FMDQ Exchange

At the heart of Nigeria’s debt capital market is the FMDQ Securities Exchange. Think of it as both the stadium and the referee for debt issuance. It provides the platform and the rules-based environment where tech companies can issue debt instruments to the public with confidence and transparency.

The FMDQ has been instrumental in building investor confidence. As it states, its goal is to “efficiently enhance the registration, listing, quotation, and trading of debt securities in the Nigerian financial markets.” By offering a regulated and liquid platform, it gives investors assurance that their investments are secure and tradable.

Its role isn’t just passive. The FMDQ Group is a vertically integrated institution, encompassing:

• FMDQ Exchange: The listing and trading platform.
• FMDQ Clear Limited: A central counterparty that mitigates risk.
• FMDQ Depository Limited: Manages the registration and settlement of securities.

This structure provides an end-to-end service that makes the entire process seamless for both the company raising money and the investors buying the debt. The recent quotation of MyCredit Investments Limited’s N2.50 billion Commercial Paper is a prime example of the FMDQ’s daily function, enabling digital lenders to access capital for their corporate purposes.

The Issuers and Their Instruments

A growing roster of Nigerian tech and tech-enabled companies are leveraging this market. The instruments of choice are typically Corporate Bonds (for longer-term funding) and Commercial Papers (CPs) (for short-term needs, usually under 270 days).

Some notable issuances include:

• Interswitch Africa One Plc: The payments unicorn raised a massive N23 billion ($63M) bond in 2020 to support its strategic growth.
• Moove Nigeria: The mobility fintech famous for its partnership with Uber raised a $30 million Sukuk (an Islamic bond) in 2022, attracting international investors like Franklin Templeton.
• Global Accelerex Limited: A prominent fintech solutions provider, it issued a N20 billion ($48M) bond in 2022 to fuel its expansion.

More recently, companies are setting up large issuance programmes that allow them to raise funds in smaller, more frequent tranches as needed. For instance, Payaza Africa Limited, a payments company, established a N50 billion Commercial Paper Issuance Programme. This programme acts as a flexible credit line, allowing Payaza to issue notes in different series over a three-year period without having to go through the entire approval process each time.

The Back-Office Engine: A Team of Specialists 

Raising public debt isn’t a DIY project. It requires a coalition of specialized financial firms to structure the deal, find buyers, and manage the process.

Arrangers and Issuing Houses

These are the architects of the deal. They advise the tech company on the structure, timing, and pricing of the bond or CP. They prepare the extensive documentation, like the Programme Memorandum, and lead the marketing efforts. This is a role dominated by Nigeria’s top investment banking firms.

• Key Players: AVA Capital Partners (Arranger for Payaza), FBNQuest Limited (involved with Global Accelerex and MyCredit), Renaissance Securities, ABSA Capital Markets, and FCMB Capital Markets.

Stockbrokers and Placing Agents

Once the deal is structured, stockbrokers and Issuing and Placing Agents (IPAs) act as the sales and distribution network. They connect the issuance with the investors — primarily pension funds, asset managers, and high-net-worth individuals.

• Key Players: For the VFD Group’s recent rights issue, brokers like Anchoria Securities Limited, TRW Stockbrokers Limited, and ARM Securities Limited were crucial. For Payaza’s CP Programme, AVA Capital Partners and Pathway Advisors Limited serve as the IPAs.

The Supporting Cast

Several other entities play critical, if less visible, roles:

• Credit Rating Agencies: These are independent arbiters of risk. They analyze the tech company’s financial health and its ability to meet its debt obligations, assigning a credit rating (e.g., A, Bbb). This rating is a crucial signal for investors. For instance, DataPro provided the credit rating for Payaza’s programme.
• Collecting and Paying Agent: A commercial bank that handles the flow of money from investors to the issuer and manages interest payments. Providus Bank fills this role for Payaza.
• Auditors: An independent accounting firm that verifies the company’s financials, lending credibility to the issuance. Deloitte audited Payaza, for example.
• Registrars: An entity, often FMDQ Depository, that maintains the official record of who owns the securities.

The Bottom Line 

The rise of public debt issuance is a significant maturation milestone for Nigeria’s tech sector. It diversifies funding sources beyond the high-stakes, equity-focused world of venture capital. This financial machinery, powered by the FMDQ and a host of specialized financial firms, provides a robust and regulated pathway for stable tech companies to secure the capital they need to grow. As more startups achieve predictable revenues, expect this trend to accelerate, further deepening the integration of tech and Nigeria’s capital markets.