At the onset of Covid-19, we updated Tekedia Mini-MBA syllabus, on the fly, to incorporate courses on how to manage and mitigate the paralysis. Many of our learners appreciated the redesign, and most used the playbooks to win awards and promotions in their firms.

As the drumbeats of sub-optimal relationships  between founders and investors in some companies in Africa, sound louder, we are updating the current editions on the fly. On Monday, two faculty members will discuss commercial law, contracting, agreements, and IPs. Mr. Chukwuemeka Mbah (LLB, BL, LLM)  holds a postgraduate degree in European and International Business Law.  Jeff Chineme Maduka (LLB, BL, LLM) holds a First Class Law degree in Nigeria and  Harvard Law in Banking, Corporate, Finance, and Securities Law.

• Business & Commercial Law  – Chukwuemeka Mbah (LLB, BL, LLM)
• Contracting, Negotiation and IP – Jeff Chineme Maduka (LLB, BL, LLM)

Before you sign that agreement, have you asked a sharp-minded lawyer to review it? At Tekedia Mini-MBA, our vision is to empower and nurture innovators across many domains.

A few weeks ago, Nigeria secured a landmark victory in its bid to overturn a $10 billion arbitration judgment award against it in the P&ID case. Previously, Nigeria was required to put a $200 million security on that sham award execution. But good things happened after the favourable decision. Besides this $200M, “The court also awarded a £70,000 cost in favour of Nigeria in addition to an earlier award of £1.5m.” Yet, with all these goodies, Nigeria is getting into a trap if we do not offer our best moves. 

It is a miracle: P&ID which felt it could pocket more than a third of Nigeria’s budget has been asked by an English Court to pay Nigeria “£1.5 million within 21 days to cover legal costs the FRN incurred as part of their successful application for the extension of time to challenge the arbitration award and procedural hearing earlier in the year”.

If the UK court rules against us when it matters most – dismissal of the $10 billion sham award -, Nigeria will lose the moral standi to claim unfairness. So, nothing has happened and everyone must work hard to ensure total victory especially at the end. This could be a trap: make them feel the system is fair, only to unleash surprises! Yes, people, hold that celebration!

That said, it seems this particular UK court is truly fair unlike what we have seen in the ones trying Malabu and other cases across Europe. In those ones, they convict  the oil majors, fine them for crimes in Nigeria, but ask them to send the fines to their own treasuries with nothing for the Nigerian people. Largely, they come to Abuja, select the right cases, try them in Europe, and make money with no compensation to the people directly affected, with full understanding that Nigeria’s government is weak to do anything.

Nigeria’s Battle with P&ID

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 “MAX.ng”), 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.