C&I Leasing issues N10 billion commercial paper: Takeaways for investors

This comes as part of the company’s continued efforts to optimize its working capital and refinance high-interest short-term borrowings.

The offer opened on March 10, 2025, and closed on March 14, 2025.

C&I Leasing’s financials show strong revenue growth but shrinking profitability:

Even though C&I Leasing is making more money, it is also spending a lot more, which is squeezing profits. As a result:

C&I Leasing’s total assets grew by 44%, but this was in part due to foreign currency translation gains. The depreciation of the naira inflated the value of its offshore subsidiaries, boosting the foreign currency translation reserve by 84% to N29 billion.

While this strengthened equity and reduced leverage, it did not translate to actual cash flow improvements.

C&I Leasing’s total assets surged by 44%, largely due to foreign currency translation effects from its offshore subsidiaries.

Although C&I Leasing’s N10 billion commercial paper (CP) issuance primarily targets institutional investors, it also has direct and indirect implications for shareholders and retail stock investors.

By raising funds through debt (CP) rather than issuing new shares, C&I Leasing avoids equity dilution, meaning existing shareholders maintain their ownership stake. This is positive for stock investors, as it prevents earnings per share (EPS) from being diluted.

In 2023, C&I Leasing paid a final cash dividend of 5 kobo per share and issued a bonus of 2 shares for every 3 shares held. This suggests that management prioritized rewarding shareholders despite financial pressures.

C&I Leasing has a strong repayment record on previous CPs. More so, the CP issuance provides much-needed cash flow to sustain operations and possibly refinance existing obligations.

However, the increasing debt load could pressure future earnings, potentially limiting dividend payments.

In the 2024 financial year, finance costs grew by 64% YoY to N10.427 billion, driven largely by finance lease interest.

Although commercial note interest declined by 39%, contributing 15% of the finance cost, the repayment affected the net cash flow from investing activities.

While net profit margin contracted to 1.96%, net cash flow from operating activities declined to N752 million from N14.505 billion in 2023.

While net profit margin contracted to 1.96%, net cash flow from operating activities declined to N752 million from N14.505 billion in 2023.

This could potentially impact dividend payments for the 2024 financial year.

CP issuance impact: Raising N10 billion without issuing new shares prevents dilution, which is positive for stockholders.

However, if profitability does not improve, it may limit the company’s ability to generate strong returns on equity (ROE), which is currently low at 1.59%.

The stock fell 33% YtD in 2024 after gaining 75% in 2023 but has rebounded by 5.84% YtD as investor confidence slowly returns.