Nigeria’s InfraCredit, a credit guarantee firm raises $27M from InfraCo Africa to continue to increase private sector financing.
InfraCo Africa, is part of the Private Infrastructure Development Group (PIDG) and joins the Nigeria Sovereign Investment Authority (NSIA) and Africa Finance Corporation as part of the shareholders in InfraCredit.
Gilles Vaes, Chief Executive Officer (CEO) of InfraCo Africa, and Claire Jarratt, Chief Investment Officer of InfraCo Africa, will join InfraCredit’s Board of Directors.
According to InfraCo Africa’s CEO, Gilles Vaes, “Our equity investment in InfraCredit marks the first major transaction of our dedicated investment vehicle, InfraCo Africa Investments. The infrastructure financing gap in Africa is large and requires approaches that increase the scale and pace of infrastructure development and we are therefore pleased to support PIDG’s wider strategy of developing local capital markets to unlock vital infrastructure finance.” He continued, “InfraCredit’s innovative model promotes capital flows from Nigerian institutional investors into local infrastructure developments. We are confident that this partnership will leverage the unique skills, experience and expertise offered by InfraCo Africa to support InfraCredit in underpinning projects that will create jobs, reduce poverty and promote economic growth in Nigeria.”
Pursuant to the new equity investment, InfraCredit’s total capital base (paid-in and callable capital) will increase to $173 million (c. NGN 68.3 billion), translating to an aggregate guarantee issuing capacity of up to NGN 342 Billion (c. US$ 865 million) based on its current maximum capital leverage ratio of up to 5x allowable by its rating agencies.
Given the adverse impact of the COVID 19 pandemic on the Nigerian economy, InfraCo Africa’s investment will engender confidence in InfraCredit’s credit standing, enhancing its ability to continue to increase private sector financing for infrastructure projects in key sectors such as healthcare, transport and logistics, power, renewable energy and agriculture, amongst others.
According to the Chief Executive Officer of InfraCredit, Chinua Azubike, “We are pleased to welcome InfraCo Africa, a respected and highly experienced infrastructure investor, as an equity investor and stakeholder of InfraCredit, in pursuit of our mission and strategic growth. The timely completion of this equity issuance further bolsters our balance sheet and reinforces InfraCredit’s strong fundamentals and ability to deliver shareholder value. We believe this equity investment marks a significant milestone and inflection point for InfraCredit in unlocking more infrastructure investments that will stimulate economic growth and market development. With the economic impact of COVID 19, our essentiality in deepening the domestic bond market and mobilising private capital for infrastructure investments has never been more timely and important than it is today, as the Nigerian economy shifts towards recovery.”
GuarantCo and the Nigeria Sovereign Investment Authority (NSIA) established the Nigerian Infrastructure Credit Enhancement Facility (InfraCredit) in 2017 with support from PIDG Technical Assistance. InfraCredit was established to act as a market champion for the development of the local debt capital markets and to mobilise long-term investment from local institutional investors (e.g. pension funds, insurance companies) and finance infrastructure projects in Nigeria in local currency.