Haldane McCall Plc Q2 2025 Results – Steady Profitability and Strong Equity Backing Amid Growth in Inventories

Haldane McCall Plc: Ambitious ₦250 Billion Bond Plan to Tackle Housing Deficit and Expand Growth Opportunities

Haldane McCall Plc’s plan to float a ₦250 billion bond represents a bold move to address Nigeria’s 25 million housing unit deficit and expand its hospitality and real estate businesses. The initiative aligns with a significant structural demand opportunity in Nigeria’s housing market and the growing hotel sector in Lagos. However, the proposed bond faces major challenges, including high interest rate conditions, regulatory approval delays, and elevated credit risk, given the company’s relatively small market capitalization of ₦14–16 billion compared to the size of the planned raise. While the long-term growth prospects are compelling, near-term funding cost pressures and execution risk present material uncertainties.

Strategic Rationale for the Bond Issue

• Target Size: ₦250 billion (₦75 billion first phase)
• Purpose: Fund affordable housing projects, expand hospitality assets, and grow real estate footprint.
• Current Status: Awaiting SEC approval and credit rating.
• Market Context: Nigeria’s housing deficit estimated at 25 million units, creating a large demand opportunity.

Key Strengths

1. Strong Market Opportunity Nigeria’s massive housing deficit provides a significant growth runway for developers capable of delivering affordable housing at scale. Lagos, as the largest urban hub, offers high demand for both residential and hospitality assets.

2. Capital Market Strategy as Alternative to Expensive Bank Funding By tapping the bond market, Haldane McCall aims to circumvent prohibitive bank lending rates—driven by inflation and tight monetary conditions—while securing long-term financing for strategic projects.

3. Diversified Use of Proceeds Funds will support real estate development and hotel expansion, enabling the company to capture opportunities in two high-demand sectors and diversify revenue streams.

4. Vision for Sustainable Growth Management emphasizes innovative partnerships and community-building, which could enhance brand reputation and attract ESG-focused investors over time.

Key Weaknesses & Risks

1. High Funding Cost Environment The Central Bank of Nigeria recently borrowed at 23.5%, setting a high benchmark for private-sector debt pricing. Haldane McCall’s bond, being riskier than sovereign debt, will likely attract a substantially higher yield, raising cost of capital and profitability risks.

2. Size of Planned Raise vs Market Capitalization With a current market cap of ₦14–16 billion, raising ₦250 billion represents over 15x the company’s equity base, signaling significant leverage risk and raising questions about investor appetite.

3. Regulatory & Credit Rating Delays The issuance is contingent on SEC approval and obtaining a credit rating, which could delay timelines and affect market confidence.

4. Execution & Market Uptake Risks Delivering large-scale housing projects in Nigeria comes with challenges, including land acquisition issues, rising construction costs, currency volatility, and consumer affordability constraints.

Haldane McCall’s ambitious capital raise underscores management’s growth vision and strategic alignment with a massive housing gap, which could unlock significant long-term value if executed successfully. However, the risk-return profile is currently skewed toward execution and funding cost risks, given prevailing interest rate conditions and the disproportionate scale of the raise relative to the company’s balance sheet.

For risk-tolerant investors, participation in the bond may be considered if the coupon compensates adequately for credit and liquidity risks. Equity investors should monitor funding progress, regulatory approvals, and project execution milestones before reassessing valuation upside.