Nigeria wealth agency debuts with $200 million Infrastructure funding facility

The Nigeria Sovereign Investment Authority, NSIA, has established a special credit facility to boost infrastructure development in the country.
Initiated in 2014 in conjunction with GuarantCo, InfraCredit will provide guarantees to enhance the credit quality of local currency debt instruments in Nigeria.
The NSIA said the facility will be mainly in the form of corporate/infrastructure bonds issued by eligible entities (corporate, state governments) to finance credit-worthy infrastructure projects.
The Chief Executive Officer and Managing Director of the NSIA, Uche Orji, said InfraCredit was conceived as a sustainable framework for stimulating infrastructure investments in key sectors of the Nigerian economy.
Expected to become fully operational by the second quarter of the year, Mr. Orji said its successful operation would foster the development of the Nigerian debt capital markets.
He said InfraCredit would take off with initial capital of about $200 million, consisting of paid-in equity and “second loss” contingent capital.
He said the wealth agency would subscribe to about $25 million of Naira equivalent of the paid-in equity, with other investment interests to be sourced largely from institutional investors and international finance institutions.
NSIA’s partner, GuarantCo, has already executed a callable capital funding facility agreement by providing about $50 million of the contingent capital.

It will also act as lead arranger for another $50million to be sourced from international development finance institutions with high investment grade ratings.

Incorporated as a private limited liability company based in Lagos, Mr. Orji said InfraCredit will run on a commercial basis, guided by international best practices and local governance standards.
He said its Board of Directors, which has Chinua Azubike as its Chief Executive Officer, would comprise representatives of NSIA, GuarantCo, institutional investors and independent members.
Mr. Azubike’s appointment was announced at the inaugural meeting of the Board on January 11.

Mr. Azubike, who studied law at the University of Lagos and holds an Msc. in Finance and Financial Law from University of London, has over 14 years experience in corporate finance and debt capital markets roles.
Previously the Managing Director at Dunn Loren Merrifield Advisory Partners, an investment banking firm based in Lagos, Mr. Azubike is the chairperson of the Regulation Consolidation Sub-Committee of FMDQ Debt Capital Market Development Project.

“The establishment of InfraCredit brings to fruition one of the key pillars of NSIA’s infrastructure investment strategy, which seeks to facilitate the creation of and investments in institutions that contribute to infrastructure development in Nigeria,” Mr. Orji said.
“It is expected that InfraCredit will enhance Nigeria’s capacity to attract and unlock latent pools of capital from pensions and insurance for infrastructure investment into key sectors of the Nigerian economy.

“The establishment of InfraCredit is a culmination of nearly two years of constructive partnership between NSIA, Guarantco and PIDG and we are pleased with the outcome,” he said.
In his reaction, a non-Executive Director and former CEO of GuarantCo, Chris Vermont, described InfraCredit as “a ground-breaking initiative that will unlock domestic investment in Nigeria’s infrastructure on a scale not previously seen”.
He said the local pension fund market was expanding by $2billion equivalent each year, with significant demand for low risk alternatives to government securities.

“InfraCredit is a step change in the balanced development of Nigeria’s capital markets and the wider economy,” Mr. Vermont stated.
Mr. Azubike said he was excited to be given the opportunity to lead InfraCredit in its pioneering role of connecting Nigeria’s debt capital markets to infrastructure financing.
He said the Board was already developing a deal pipeline and is very optimistic of the opportunities the market presents for InfraCredit.

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