The United Kingdom is leveraging catalytic investments to help Nigeria generate more domestic funding for sustainable infrastructure and facilitate its energy transition.
Noted,the UK government’s MOBILIST initiative, an investment of N9.5 billion ($6 million) is being funneled into InfraCredit, which is Nigeria’s sole domestic creditor guarantor, as part of its listing on the NASD OTC Exchange Plc (NASD).
The total valuation for the listing stands at N64 billion ($41 million), with InfraCredit aiming to generate N27 billion ($17.7 million) through new equity.
The Nigerian government prognosticate that over $2.3 trillion in investment is needed between 2021 and 2043 so as to address the country’s significant infrastructure inadequacies . However, local banking institutions is said to be lacking the long-term capital required. InfraCredit however, addresses this issue by offering Naira-denominated guarantees that lessen investors’ risk and enhance the credit standing of Nigerian infrastructure debenture.
This framework attracts Nigerian institutional investors such as pension and insurance funds, facilitating their investment in projects financing instruments.
Up to now, InfraCredit has used warranty to establish a project pipeline exceeding N750 billion ($500 million). With its listing on the NASD supported by MOBILIST, it has now drawn direct equity investments from two pension funds, enhancing its ability to provide additional guarantees for future projects.
MOBILIST’s support will also enhance InfraCredit’s green growth strategy, directing more investments towards renewable energy sources.
As part of its growth objectives, InfraCredit is considering a listing on the Nigerian Exchange (NGX). MOBILIST has previously announced a collaboration with NGX to further investment aimed at achieving the UN Sustainable Development Goals (SDGs) through listed products. This partnership underscores the UK’s ongoing guarantee to aiding Nigeria in strengthening its capital market.
Remarks on the development, Mr. Jonny Baxter, the British Deputy High Commissioner in Lagos, stated: “InfraCredit’s success demonstrates the effectiveness of long-term partnerships. The UK, through the Foreign Commonwealth and Development Office (FCDO), is honored to have been instrumental not only in the establishment of InfraCredit via the Private Infrastructure Development Group (PIDG) but also in its ongoing success. This deal highlights the competence of public markets to assemble domestic capital on a large scale. By listing with the support of MOBILIST, InfraCredit will enable local institutional investors to seize the growth opportunities generated by sustainable infrastructure projects while ensuring that local companies can access the capital required to execute these initiatives.”
InfraCredit’s CEO, Mr. Chinua Azubike, expressed: “This marks the start of a new era for InfraCredit. We are truly grateful for the trust placed in us by our new domestic institutional investors and the UK Government through MOBILIST. Our conversion to be listed among public company with access to the equity capital markets is a testament to our goal of cultivating a richer, more inclusive capital market for local financing, accelerating infrastructure projects in Nigeria. By expanding our ownership and adhering to public market regulations, InfraCredit is set to make a long-term impact by boosting investor confidence and acting as a reliable catalyst for sustainable infrastructure financing on our journey toward growth and scale.”
GuarantCo,founded in 2007 a PIDG entity, and the Nigerian Sovereign Investment Authority (NSIA), InfraCredit was designed to strengthen domestic debt capital markets for infrastructure financing and unlock long-term funding in Nigeria. It was first of several such organizations to be formed in other countries, such as InfraZamin in Pakistan and Dhamana in Kenya. In 2020, InfraCo Africa, another PIDG company, invested in InfraCredit. then, InfraCredit has established financing collaborations with UK-based organizations like British International Investment (BII) and Financial Sector Deepening Africa (FSDA).
