- Nigerian consumer goods maker aims to raise N5 billion through Series 28 and 29 commercial papers
- Discount rates range from 24.9935% to 25.2229%, reflecting yields of up to 38.5%
Lagos, Nigeria – Daraju Industries Limited, a leading Nigerian consumer products manufacturer, has announced its Series 28 and 29 Commercial Paper Notes offer as part of its ongoing N20 billion issuance programme. The instruments are being offered at discount rates of 24.9935% for the 180-day note and 25.2229% for the 270-day note, corresponding to yields of 38.5% and 31%, respectively. The offer opened on August 28 and will close on September 5, with the allotment and issue date set for September 6, 2024.
Daraju plans to raise N5 billion ($3.1 million) through these offerings, targeting institutional investors with a minimum subscription of N5 million. The 180-day commercial paper will mature on March 5, 2025, while the 270-day paper is set to mature on June 3, 2025. FBNQuest Merchant Bank Limited is the Lead Arranger, with CardinalStone Partners Limited and Coronation Merchant Bank Ltd acting as Joint Dealers.
Strong Market Position Amid Financial Challenges
Founded in 1989, Daraju started as an importer of household products before launching its production activities with its popular MY MY toothpaste brand. Today, the company’s product line includes baby care, personal hygiene, household cleaning, and oral care items. Daraju has expanded its operations internationally, establishing offices in India, China, Ethiopia, and the UAE, and is eyeing new markets in Cameroon and South Korea.
DataPro, a Nigerian rating agency, assigned Daraju a long-term rating of BBB and a short-term rating of A2, indicating fair credit quality and adequate capacity to meet financial obligations. “This company, in our opinion, has the ability to meet its ongoing obligations, but its financial strength is vulnerable to adverse changes in economic conditions,” DataPro noted.
GCR Ratings also affirmed Daraju’s national scale long-term and short-term issuer ratings at BBB-(NG) and A3(NG) with a stable outlook. The affirmation reflects continued shareholder support through additional long-term loans, easing liquidity pressures and mitigating refinancing risks.
Navigating Market Volatility and Operational Hurdles
Daraju faces ongoing challenges, including high finance costs and significant foreign exchange losses experienced in 2023. GCR highlighted the company’s efforts to offset these pressures through local sourcing of raw materials and expanding export sales to neighbouring countries, which are expected to strengthen Daraju’s business profile in the medium term.
Daraju’s dominant position within Ashwah Holdings, which accounts for over 90% of the group’s revenue and assets, is bolstered by synergies within the group’s value chain, providing essential support services to its core manufacturing business. However, the rating agency flagged concerns over low capacity utilisation rates across production lines, which continue to constrain operational efficiency and profitability.
“The group’s strategy to shift towards local sourcing and boost export sales should mitigate the adverse impacts of the Naira devaluation,” GCR stated, adding that these measures are anticipated to enhance the company’s market position and financial stability in the coming years.
