Nigeria’s first infra debt fund eyes $636m

The ‘pioneering’ listed vehicle has already secured commitments from nine Nigerian pension funds for its initial placing.

Nigeria’s first infrastructure debt fund was yesterday listed on the country’s securities exchange in its initial moves towards a 200 billion naira ($636 million; €550 million) target.

The Nigeria Infrastructure Debt Fund, launched by local investment firm Chapel Hill Denham Management, listed its first 49.5 million units as part of what is set to be a 2 billion issuance programme.

These were subscribed to by a group of investors that included nine Nigerian pension funds, Philip Southwell, NIDF’s chairman, told Infrastructure Investor. He added that 80 percent of the proceeds have already been invested to provide two principal loans covering 10 power and energy infrastructure projects.

Southwell said another group of 10 local pension funds are currently in the approval process to invest in the fund and he is hopeful of securing the interest of the bulk of the country’s 21 pension fund administrators. This group has 7 trillion naira to invest, he stated, in a market that has previously “been slow to diversify its asset allocation” away from government bonds. The fund is aiming to take currency risk away from the market that has often dealt in dollar denominations, he explained.

The NIDF has a floating rate of return target of between 350 and 500 basis points over five-year periods. It will make naira-denominated loans with terms between 10 and 15 years and is seeking investments in the transport, power, renewables, utilities, energy infrastructure, logistics and PPP sectors.

“The market opportunity is huge in Nigeria, not only because of the growth of pension fund assets but also due to the availability of select high-quality, investable projects,” Southwell said.