The Nigeria Sovereign Investment Authority (NSIA) and GuarantCo, are pleased to announce the establishment of an infrastructure credit enhancement facility in Nigeria (“InfraCredit”) conceptualized in 2014.
InfraCredit will provide guarantees to enhance the credit quality of local currency debt instruments (mainly in the form of corporate/infrastructure bonds) issued by eligible entities (corporates, state governments) to finance creditworthy infrastructure projects in Nigeria. Intended as a sustainable framework for stimulating infrastructure investments in key sectors of the Nigerian economy, its successful operation will foster the development of the Nigerian debt capital markets.
Incorporated as a private limited liability company based in Lagos, Nigeria, InfraCredit will run on a commercial basis guided by international best practices and local governance standards. Its Board of Directors, will be comprised of representatives of NSIA, GuarantCo, institutional investors and independent members.
InfraCredit’s Board of Directors appointed Chinua Azubike as the company’s Chief Executive Officer effective January 11, 2017 at its inaugural board meeting.
Chinua Azubike has over 14 years experience in corporate finance and debt capital markets roles. Previously, Chinua was a Managing Director at Dunn Loren Merrifield Advisory Partners, an investment banking firm based in Lagos. He studied law at the University of Lagos and holds an Msc. in Finance & Financial Law from University of London. Chinua is the chairperson of the Regulation Consolidation Sub-Committee of FMDQ Debt Capital Market Development Project.
InfraCredit will be capitalised with up to US$200million composed of paid-in equity and “second loss” contingent capital. NSIA has committed to subscribe US$25million (Naira equivalent) of the paid in equity, with other investment interests to be sourced largely from institutional investors and international finance institutions. GuarantCo has executed a Callable Capital Funding Facility Agreement providing US$50million of the Contingent Capital and will act as lead arranger for a further US$50million to be sourced from international DFIs with high investment grade ratings.
InfraCredit is expected to become fully operational by Q2 2017.
Commenting, Uche Orji, Chief Executive Officer and Managing Director of the NSIA said “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. 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”
In his statement, Chris Vermont, Non-Executive Director and former CEO of GuarantCo said “InfraCredit is a ground-breaking initiative that will unlock domestic investment in Nigeria’s infrastructure on a scale not previously seen”. He further added that “The local pension fund market is expanding by $US2billion equivalent each year and there is 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.”
Chinua Azubike, Chief Executive Officer of InfraCredit added “I am honoured and excited to have the opportunity to work with the Board and team to lead InfraCredit in its pioneering role of connecting Nigeria’s debt capital markets to infrastructure financing. We have already developed a robust deal pipeline and are very optimistic of the opportunities the market presents for InfraCredit”