Acorn Holdings sees oversubscription of final tranche of its Green Bond

KENYA – Property developer Acorn Holdings Limited has closed the final tranche of its Medium-Term Green Note Programme under which the first Green Bond was launched.

In a statement, the company says the bond has raised KSh2.096 billion (US$19.4 million) against a target of KSh1.438 billion (US$13.3 million) representing a subscription rate of 146 percent.

The green bond was launched in October 2019 for KSh5 billion (US$46.2 million), becoming the first of its kind in Kenya.

In the process, the first tranche of the issue raised KSh4.262 billion (US$39.4 million) against a minimum target of KSh2 billion (US$18.5 million).

In May 2021, Acorn sought and was granted approval by the Capital Markets Authority to upsize the MTN programme from KSh5 billion (US$46.2 million) to Sh5.7 billion (US$52.7 million).

The final tranche was therefore aimed at raising the Kshs738 million (US$6.82 million) remaining from the initial programme and the additional KSh700 million (US$6.5 million) from the upsized programme.

The notes available for subscription under the final tranche, therefore, amounted to KSh1.438 billion (US$13.3 million).

According to the company, the subscription book was well diversified in terms of its funding base with significant interest from Kenyan domestic pension funds, commercial banks, and re-insurance companies.

The additional financing will go towards the development of an additional 2 PBSA properties providing 2,654 beds bringing the total numbers of developments funded under the MTN programme to 8 projects providing 7,349 beds.

In February 2021, Acorn launched the Acorn Student Accommodation Development REIT (ASA D-REIT) and Income REIT (ASA I-REIT) with support from InfraCo Africa (a sister PIDG company) who acted as Anchor Investor and committed over KShs1 billion (US$9.2 million).

“We are seeing new corporate bond issuances coming to the market and this is a very positive development for the Kenyan Capital Markets”

Edward Kirathe – Group CEO, Acorn Holdings

As part of this transaction, the Acorn Green Bond was transferred to the ASA D-REIT.

All Acorn student accommodation projects are now being developed and constructed through the ASA D-REIT and then sold to the ASA I- REIT once operational as this approach unlocks construction capital and enables it to be recycled into new developments.

Acorn Holdings Limited Group Chief Executive Officer, Edward Kirathe, noted; “When we started this journey in 2019, the Bond Market in Kenya had essentially dried up with new issuances non-existent. Now we are seeing new corporate bond issuances coming to the market and this is a very positive development for the Kenyan Capital Markets. We continue to be grateful for the support we continue to receive from GuarantCo and PIDG as part of our journey to providing safe, secure and affordable accommodation to University and College students in Kenya”.

Speaking on behalf of Stanbic Bank Kenya Limited, the Chief Executive, Charles Mudiwa said, “As a Kenyan Bank, we are honoured to be part of such a historic deal. Not only does this demonstrate our overall commitment to contributing to the economic growth of the country, but it also paves way for domestic financing institutions to be part of green financing and have a social impact in the Kenyan market.”

Gregory Waweru, the Head of SBG Securities added that: “As the placing agents for East Africa’s first-ever Green bond, we are proud of this successful and landmark Issuance that is a trailblazer for sustainable financing via the capital markets. We are keen to leverage on our insights and knowledge to grow and develop our continent and build a future that is structured to last.”

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