In September 2022, real estate (RT) development company UAB Eika issued its second bond issue worth EUR 5 million and raised capital at 6 percent annual interest, payable semi-annually. The issue was attended by both retail investors, who usually invest up to EUR 50,000, and high net-worth individuals with free funds. Private banking clients also showed great interest, a total of 111 individuals and legal entities.
“We have special investor confidence in our group of companies. Even in the current circumstances, EIKA can borrow on the capital markets at a similar price as the first time. Diversified financing helps us to continue to confidently develop the planned projects and offer more housing to the Vilnius market in the near future,” says Domas Dargis, EIKA’s CEO.
The distribution, which took place on September 8–23, and was organized by AB Šiaulių bankas, was conducted on an auction basis, i.e. investors could indicate for themselves the interest rate for which they would lend funds in the range between 5.5 and 6 percent. The interest rate indications were distributed in the following proportions: an amount of EUR 2,967,000 was subscribed with an interest rate of 5.5 percent (59 percent of the issue amount), an amount of EUR 1,653,000 was subscribed with an interest rate of 6 percent (33 percent of the issue) and the remaining amount of EUR 380,000 in the range between 5.7 percent and 5.9 percent (8 percent of the issue). According to the auction principle, EIKA had the opportunity to issue almost EUR 3 million of bonds at 5.5 percent or to fulfill the entire EUR 5 million issue by distributing 6 percent to all investors. All investors, despite the lower interest rate recorded when filling out their applications, received the highest interest rate (6%).
“In strengthening its positions in the capital markets, Eika has taken another step. The aggravated geopolitical situation did not prevent the successful completion of the distribution, as investors sought refuge during a period of market turbulence. Clients were impressed not only by the well-known Eika brand, but also by the opportunity to choose the desired interest rate,” said Domas Klimavičius, Head of the Investment Services Group at Šiaulių bankas.
The results of the second EIKA issue are similar to the first one, which EIKA issued in November 2020. At that time, Šiaulių bankas also organized an interest auction, during which investors could indicate from 4.5 to 5 percent. interest. At that time, the entire 5 million euro issue was distributed at a final interest rate of 5%.
EIKA plans to refinance the first issue in November 2022, when it will offer existing investors another 2-year loan, but at a higher interest rate of 6 percent, set during the second issue auction. This is intended to offer investors in the first issue the same return as buyers of the second bond issue.