Max Rides $22 Million Bond – A New Funding Model for Nigerian Startups

Max Rides $22 Million Bond – A New Funding Model for Nigerian Startups

Max, the motorbike-hailing company in Lagos, before it pivoted and expanded into other major cities is inventing something new: private bond placement for Nigerian tech startups. A bond is a fixed income instrument (loan-like) made by an investor to a borrower. Typically, our startups have gone for debts or equity; bond is a new redesign. The news that Max successfully issued a one year $1 million fixed-rate notes under a newly structured $22m bond program shows the bond strategy has a promise.

Metro Africa Xpress (“MAX” or “”), the leading mobility platform in Nigeria and West Africa, today announced the successful issuance of a ?400m 1-year fixed-rate notes (the “?400m Series 1 Bond” or the “Bond”) under its newly structured ?10bn/$22m Private Company Bond program (the “PCB Program”).

The ?400m Series 1 Bond is MAX’s first-ever bond issuance and the first bond issued by a mobility company in Africa. Despite the challenging global economic backdrop, the Bond, distributed through a private placement, received strong interest from highly reputable local and international fixed income investors that are seeking exposure to a high-quality issuer like MAX.

The Series 1 Bond is the first issuance under MAX’s multi-currency ?10bn ($22m) PCB Program, which was structured in line with our mission to build the technology and financing infrastructure for mobility across Africa. Proceeds from the Bond shall be used to fund MAX’s growing asset financing program across 2-wheeler, 3-wheeler and other vehicle classes in Nigeria and beyond, as MAX continues to institutionalize driver financing across the continent.

The transaction and the PCB Programme were both arranged by DLM Advisory (“DLM”), a Nigeria-based SEC-regulated full-service Developmental Investment Bank that combines advisory, origination, underwriting and distribution capabilities. DLM has built a successful track record of structuring, participating in and delivering bespoke and innovative capital raising solutions to sovereign entities as well as public and private organizations. (from The press release)

Largely, private companies, which are not yet ready for the public market, go through the path of bonds when they do not want more dilution of ownership or more precisely sell more shares to investors.

Expect more of this in the next coming months as startups begin to pay more attention to the shares they are selling,, and the broad ownership and control. Indeed, most founders might have sold lots of ownership at low valuation and with their businesses looking promising, they may be hesitant to lose more control. With the debts market exceedingly challenging, private bond placement may be the new normal. Of course, no one knows why Max is going this path instead of the typical equity-based capital raise.


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2 thoughts on “Max Rides $22 Million Bond – A New Funding Model for Nigerian Startups

  1. It could open another playbook, but we first need to educate ordinary people on what bond means, in simple and clear terms, perhaps with illustrations. It’s only when people have a grounded knowledge of things, plus where to get the necessary assistance; that’s when it becomes a viable option.

    Right now if a start-up needs to take the route of bond financing option, it also needs to arm the buyers (financiers) with information on where and how to trade same; for now the information asymmetry is puzzling.

    Let’s see how MAX plays it anyway.

    1. MAX is a private company so this is a private bond issuance, to qualified investors only. Qualified investors are high net-worth individuals and institutional investors (pension funds, endowments, PE funds, etc). These sorts of investors hardly need to be educated on bond structures and trading. However, I wish there was more information on the terms of the bond issuance (like maturity, interest rate) so we can have some sort of standard for the bond market for startups.


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