Nigeria’s Sovereign Wealth Fund (SWF) with $1 billion in assets under management is seeking co-investors for a number of infrastructure projects to leverage its capital as the halving in crude prices makes the fund unlikely to receive a major cash injection from the government anytime soon.
“We will use the $400 million in our infrastructure fund to attract an additional $1.6 billion of co-investments,” Uche Orji, MD/CEO of the Nigerian Sovereign Investment Authority (NSIA), said in an interview at BusinessDay’s headquarters in Lagos.
“The mechanism for doing it is now ready.”
A proposed Real Estate co-investment fund is targeting $800 million of capital with the NSIA contributing $100 million. Four SWFs have committed $100 million each and the NSIA is negotiating with three other SWFs and endowment funds, said Orji, a former Goldman Sachs Group Inc. banker.
The NSIA is planning similar funds focused on Power and Industrials, Agriculture and Healthcare.
The NSIA’s mandate embraces a mix of stabilisation, savings and infrastructure funds, while outsourcing to a range of asset managers, including Goldman Sachs and UBS AG.
“Co-investments’ can help attract foreign direct investments, and together with asset transfers, can be a creative means of funding the SWF,” Orji said.
“We also anticipate to start paying dividends in 2017 in accordance with the law.”
The Federal Government owns 45.83 percent of NSIA assets, with the remainder made up of State Governments (36.25 percent), Local Governments (17.76 percent), and the FCT (0.16 percent).
Nigeria relies on crude exports for about 95 percent of its foreign currency earnings and about 70 percent of government revenue.
The Abuja-based wealth fund, set up in 2011, invests revenue generated when the oil price exceeds that budgeted by the government.
The Federal Government’s 2015 budget is based on a $53 per barrel oil benchmark.
Brent crude for December settlement fell 63 cents to $47.35 a barrel on the London-based ICE Futures Europe exchange at 10:19 a.m. on the New York Mercantile Exchange on Friday, as the dollar surged following a better-than-expected U.S. jobs report.
The fund whose mandate includes social infrastructure is also planning to partner with five teaching hospitals and a federal medical centre to co-develop world class diagnostic centres and specialist clinics.
“We will start to see movement on this next year. We have signed agreements with the Lagos University Teaching Hospital (LUTH) and others in Umuahia, Maiduguri, Ilorin and Port Harcourt,” Orji said.
“There will be an operator for each of the businesses which we will select jointly.”
About 30,000 Nigerians spend $1 billion on overseas travel for health related purposes annually.
Cardiovascular, orthopaedics, renal and cancer treatments make up 75 percent of the reasons for the trips, said Orji.
Despite “volatile market conditions,” the fund saw net comprehensive income rise to N15.8 billion ($79.4 million) in 2014, from N525 million in the 15 months through the end of 2013, Orji said.
The second Niger Bridge in which the NSIA is in partnership with Julius Berger to co-develop, finance, construct, operate and maintain, may see financial close by the first quarter of 2016, according to Orji.
PATRICK ATUANYA
