AIICO acquires 5% ownership stake in InfraCredit

Cynthia Ezekwe

American International Insurance Company Limited (AIICO) has acquired a five per cent stake in the total share capital of InfraCredit, a Lagos-based credit guarantee institution. This marks the second time a domestic institutional investor has invested in InfraCredit, with the first being Leadway Assurance Plc.

The new equity investment has enabled InfraCredit to increase its paid-in capital base to N148.55 billion, which translates to an aggregate guarantee issuing capacity of up to N742.77 billion. This significant increase in capital demonstrates the growing demand for infrastructure finance in Nigeria and the increasing importance of credit enhancement in facilitating project financing.

Infracredit, in a statement, notes that the equity investment will form part of its core capital, which will strengthen the company’s ability to issue guarantees and maintain its ‘AAA’ credit rating. The investment is also expected to  help diversify InfraCredit’s ownership structure, which is an important step in the company’s overall capital structure.

In addition to strengthening its financial position and credit rating, InfraCredit also noted that it is committed to continuing to innovate and find new ways to mobilise private sector financing for infrastructure projects. This,it stated, is an important part of the company’s overall mission and will be supported by the new equity investment.

Commenting on the investment, Babatunde Fajemirokun, CEO of AIICO Insurance, said, “This investment is the evolution of what we at AIICO Insurance believe will be a long-term partnership with InfraCredit.”

According to Fajemirokun, over the past two years, AIICO Insurance has invested in InfraCredit guaranteed bonds and participated in novel financing arrangements promoted by the company to bring infrastructure investment to areas that have been significantly underserved. 

The AIICO Insurance CEO expressed confidence that the  partnership with InfraCredit for the’ long haul’ underscores its commitment to bridging the infrastructure gap in Nigeria. 

Sanjeev Gupta, chairman of the InfraCredit board of directors, expressed his excitement about AIICO’s investment. He noted that this investment will play an important role in attracting private sector capital for infrastructure financing and will be beneficial in improving the private sector’s involvement in the company’s ownership structure.

Chinua Azubike, the chief executive officer, InfraCredit stated “The admission of AIICO Insurance, the second private domestic institutional investor in InfraCredit, reinforces the confidence in the sustainability of InfraCredit’s unique business model.”

In a statement, Ifeanyi Azubike, managing director and CEO of InfraCredit, noted that AIICO’s equity investment further strengthens the company’s core capital base and expands its guarantee capacity. He added that this will allow InfraCredit to continue acting as a catalyst for attracting domestic credit from pension funds, insurance firms, and other long-term institutional investors into credit-worthy infrastructure projects.

Azubike also noted that AIICO’s equity investment aligns with its sponsor’s strategic objective of broadening its investor base through private sector participation,enabling InfraCredit to expand its capitalisation and strengthen its capacity.