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.

A private equity firm which supposedly invested $18 million in Healthplus, the pharmacy chain in Nigeria, claimed the management of Healthplus is not executing as desired. Healthplus Management disputes that assertion, maintaining it was an excuse to do something horrible to the firm. As that happens, litigation is flaring up. The PE, Alta Semper Capital, has “changed” the CEO of the company, and claiming to be the majority shareholder, plans to take control of the company operations. Then, I read this from Nairametrics.

• The new funding was to enable the company to expand its retail footprint and enhance its competitive position.
• It had approximately 80 locations across the country at the time and currently has about 90 branches.
• HealthPlus Ltd is owned by HealthPlus Africa Holdings Ltd, with a 94,998 ownership, while Bukky George owns 5,002 shares; thus, 94.9% ownership and 5.1% ownership respectively.
• Nairametrics understands that Bukky George owns less than 50% of HealthPlus Africa Holdings, while Alta Semper owns majority shares in the holding company, estimated at between 53% and 55%.
• Sources inform Nairametrics that HealthPlus makes about N5 billion in revenue annually.

Did it mean the company was worth about $20 million since the new “investment” was $18 million? And the owners lost the majority on that? Healthplus is a category-king company and certainly should be in multiples, in my opinion.

Alta Semper, also known as Idi Holdings, had announced a $18-million investment into the health firm in 2018.

However, founder Bukky George told BusinessDay that Alta Semper Capital LLC UK (AS) announced an $18 million investment in HealthPlus on March 15, 2018, but paid up $10 million as Tranche 1. Tranche 2 was due 12 months later.

She said the pledged funds were never fully disbursed in order to implement the firm’s strategic objectives, stressing that its growth journey had been fraught with serious challenges, unmet expectations, and erosion of market share and brand equity.

If this is true, the Nigerian government should do what they did when Philip Osondu signed out his life, on contract, to play for an European team for life! Yes, a team tricked Osondu with a football contract. And he was never going to be a free man, in football. Quickly, the then Nigeria Football Association (NFA) put a rule that all foreign contracts to Nigerian players must be vetted by NFA to prevent that type of evil. Sure, no one needs government on private commercial deals! 

Here, the problem is not just the equity holding percentage but the voting power of the class of shares. There are many things which look severely troubling here. We hope it ends well as Healthplus is already bleeding value. Yes, few will supply them drugs under this climate unless they prepay.

While there are issues here, I do not think this valuation makes sense for the possibly largest modern pharmacy chain in Nigeria. No wonder, some stakeholders are pushing for changes in the agreement. What is happening here is complex and frightening, and every founder should learn from it.

HealthPlus Warring Factions Should Enter Arbitration Before Value Gets Destroyed

Call it one of the evolutions out of Covid-19. Yes, no one wants to touch anything. And if you can avoid a credit card swipe, even better. So, the latest news is that Amazon has created a way for people to pay with waving their palms. Of course, that palm has to be linked to a loaded bank or credit card account. The system simply uses the biometrics on the palm to validate the payer and allows payment to go through.

Amazon has been working on making cashiers redundant for years, and that effort just got one step closer. This week the e-retail giant introduced Amazon One, allowing customers at its Amazon Go stores to pay with a scan of their palm prints, which is linked to a credit card on file (read how it works here). The innovation could allow for more shopping convenience but raises privacy concerns around allowing a major corporation to collect biometric data. It also begs the question of what happens to the millions of Americans employed as cashiers.

To all the privacy advocates, as I say, you are fighting a lost battle because humans are increasingly “un-privacytizing” themselves at scale. And they seem to be fine with that trajectory.  A few decades ago, resumes were confidential documents, today, here we are on LinkedIn. When you count  that people stream when they are brushing teeth on YouTube, you get the idea.

Now, Amazon takes it to another level: drop the plastics, we have got palms. Why not like a world without card plastics?

I predict in 10 years, most will ask for a biochip on their foreheads so that the palm can be playing games on their phones while the forehead does the paying. But note one thing: wave hand, show foreheads, etc the bank account must be loaded for the payment to go through. Not sure any invention is coming soon to override that requirement!