Novitas assisted the Lombard Group in raising debt capital, bolstering its capital base ahead of new SAM regulations.
After an extensive business and regulatory review, it was decided to issue a subordinated Tier 2 bond in Lombard Insurance Company (“LIC”). The ZAR 1 billion Domestic Medium Term Note Programme will provide ready access to the debt capital markets, allowing the issuance of additional debt under the Programme. A pre-marketing roadshow took place in Cape Town and Johannesburg, followed by the first drawdown from the Programme.
Due to the non-listed, debut nature of the issuer, an extensive dialogue with a broad range of fixed income investors was required. Additional challenges involved market volatility and meeting stringent FSB regulatory requirements. Despite these challenges, the Programme was listed on the JSE on 25th November 2014 and ZAR 200 million was raised by way of private placement. The debt issue was rated BBB+, priced at 3M JIBAR +475 basis points and was oversubscribed.
This is a ground-breaking transaction for Lombard, not only being a debut Tier 2 bond issue for the company, but also for the wider group, paving the way for future public transactions by the company.