NSIA commits to invest in Nigeria infrastructure debt fund

Nigeria's ministry of finance building
Nigeria's ministry of finance building

The Nigeria Sovereign Investment Authority, NSIA, on Wednesday announced that it will invest in the Nigeria Infrastructure Debt Fund, NIDF.

In a statement in Abuja, NSIA said the proposed investment aligns with its mandate “to develop and explore opportunities to play a leading role in driving sustained economic development for the benefit of all Nigerians.”

Managed by Chapel Hill Denham Management Limited, the Fund is a close-ended fund domiciled in Nigeria.

PREMIUM TIMES learnt that the fine details of the investment, including the amount involved and the terms, would eventually be made public as discussions are currently ongoing.

It is the first and only domestic currency-listed infrastructure debt fund across Africa and is focused on mobilising domestic savings, particularly pension funds, life insurance companies, large corporate as well as family office groups – for investing in economically critical and financially viable infrastructure asset.

Details on the Fund obtained by PREMIUM TIMES on Wednesday showed it is used in supporting traditional infrastructure sectors, primarily transport, power, renewable energy, utilities, energy infrastructure, logistics and other public-private-partnership, PPP, type of investments, with Naira long-dated senior debt.

NIDF is able to support these projects with long-term financing and in the process, generates superior risk adjusted returns for its investors.

The Chief Executive Officer and Managing Director of NSIA, Uche Orji, said the investment was in line with its strategy to participate in critical investments to develop key infrastructure in the country.

“We are pleased to support NIDF, as it is consistent with NSIA’s strategy of enabling Nigeria pension fund participation in infrastructure development, makes available long-term Naira financing, and is led by a high-quality management team.

“We look forward to working with the NIDF team to ensure the fund grows through further institutional investor participation and access to high-quality investments,” Mr. Orji said.

The NSIA was established by the instrumentation of the Nigeria Sovereign Investment Authority (Establishment, etc.) Act 2011, to manage funds in excess of budgeted hydrocarbon revenues.

The agency has a mission to play a leading role in driving sustained economic development for the benefit of Nigerians through building a savings base for the Nigerian people, enhancing the development of Nigeria’s infrastructure and providing stabilisation support in times of economic stress.

It operates three mandate funds, namely the Stabilisation Fund, the Future Generations Fund and the Nigeria Infrastructure Fund.

Chief Investment Officer of the NIDF and Chief Executive Officer of Chapel Hill Denham, Bolaji Balogun, said: “Mobilisation of domestic currency sources for funding infrastructure is critical for Nigeria, in order to meaningfully bridge the existing infrastructure deficit.”

Mr. Balogun said NIDF would continue to direct institutional investments into productive infrastructure asset, which have a positive development impact, through the multiplier effect on investments, economic growth and well-being of the population.

“NIDF has the potential to mobilise a meaningful proportion of this requirement, by channelling the growing pension and insurance assets as well as other long-term pools of capital into infrastructure investment and financing,” he explained.

Chairman of the NIDF’s Investment Committee, Philip Southwell, said NSIA’s commitment to invest in the Fund was shifting the paradigm from the usual, as this was the first time this kind of investment was being undertaken in local currency and by an agency outside commercial banks and other financial institutions and agencies.

“Historically, senior debt financing for infrastructure projects in Nigeria has been provided by commercial banks, financial institutions, export credit agencies and multilateral/bilateral investment agencies in US dollars with a substantial proportion in relatively short tenors.

“The NIDF changes that paradigm for Nigeria. By listing the NIDF on the Financial Markets Dealers Quotations, FMDQ, Exchange in July 2017, we have created liquidity in an asset class that is inherently illiquid, strengthened the domestic capital markets and enabled a wider range of investors to invest in infrastructure,” he said.

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