Nigeria closes EOIs for asset manager position of its N1trn Infra-Co

…Country’s 0.25% infrastructure-to-GDP falls below 70% global benchmark

…Capex received N4.37trn in 2021 budget

Ben Eguzozie, in Port Harcourt

Nigeria has closed entries for expressions of interest for a candidate to be selected as qualified to be appointed as the asset manager of its newly established infrastructure company, known simply as InfraCo. It has operating capital of N1 trillion.

The Central Bank of Nigeria (CBN), Africa Finance Corporation (AFC) and the Nigeria Sovereign Investment Authority (NSIA) had two weeks ago called for proposals from qualified asset managers from around the world to apply to manage its infrastructure company.

Business A.M. could not get details of the number of applications received before the termination of the EOI period which was March 16.

The right asset manager would be selected from qualified asset managers active in the infrastructure sector, to manage the Nigerian infrastructure firm.

InfraCo, whose establishment was announced in February by President Muhammadu Buhari, was set up with a startup funding of N1 trillion, and would function by providing funding for the Nigeria’s critical infrastructure projects to help accelerate growth in the country.

Infra-Co will finance public asset development, rehabilitation and reconstruction as well as invest in cutting edge infrastructure projects for roads, rail, power and other key sectors, the vice president’s media aide said.

Over time, its funding is expected to grow to N15 trillion.

According to the CBN, AFC and NSIA, InfraCo is a dedicated privately-managed infrastructure and industrial vehicle that will harness opportunities for Nigeria’s infrastructure development by originating, structuring, executing and managing end-to-end bankable projects in that space.

The successful asset manager will be responsible for establishing a general partner/asset manager organization, perform the following main functions, among others specified in the detailed request for proposal (RfP): develop the consolidated business plan and financial model for InfraCo and its subsidiaries; manage the day-to-day operations of the asset management business of InfraCo; plan, lead and coordinate the promotion of InfraCo and capital raising activities.

The InfraCo asset manager will also provide end-to-end origination, execution, structuring, closing, portfolio management and exit/sell-down of investments; design the optimal capital structure of the infrastructure company and its subsidiaries best suited to its investment objectives; lead negotiations of guarantees for InfraCo; and procurement of strong ratings from credible international ratings agencies.

Nigeria, Africa’s top oil producer and the continent’s largest economy, is bedevilled by severe infrastructure deficits due to immense underfunding: lack of or inadequate affordable housing, motorways, electricity, water, healthcare, among several others.

The World Bank estimates that to fill the country’s infrastructure gaps, some $14.2 billion will be needed to be spent yearly for the next 10 years.

But Moody’s Investors Services, a global risk assessment firm, said Nigeria needs $3 trillion yearly for 30 years to meet its infrastructure spending gaps. “Significant financing from private sector and multilateral needed to address Nigeria’s infrastructure deficit. Nigeria is behind other emerging market peers; and will require significant investments to bridge its infrastructural gap,” the report said.

According to the International Monetary Fund (IMF), the World Bank’s private sector specific arm, said Nigeria’s infrastructure stock of 0.25 per cent of the GDP remains far below the 70 per cent international benchmark.

Meanwhile, in the current 2021 Appropriation Act, the Buhari administration allocated N4.37 trillion for capital expenditure, which accounts for 32.2 per cent of the total proposed budget, leaving the bulk of the budget to recurrent expenditures.