Infraco Africa invests $27m in Infracredit to boost infrastructure finance in Nigeria
By Infracredit, a ‘ AAA’ rated specialised local currency infrastructure credit guarantee institution has announced a $27 million equity investment by Infraco Africa, to become a part of the Private Infrastructure Development Group (PIDG).
Infraco Africa’s equity investment, made through its dedicated investment vehicle, makes Infraco Africa an equivalent shareholder alongside the Nigeria Sovereign Investment Authority (NSIA) and Africa Finance Corporation. On account of this investment, Gilles Vaes, chief executive officer of Infraco Africa, and Claire Jarratt, a chief investment officer of Infraco Africa, will join Infracredit’s board of directors.
“Our equity investment in Infracredit marks the first major transaction of our dedicated investment vehicle, Infraco Africa Investments,” said Gilles Vaes, CEO, Infraco Africa.
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 said “Infracredit’s innovative model promotes capital flows from Nigerian institutional investors into local infrastructure developments.
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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 $173 million (about N68.3 billion), translating to an aggregate guarantee issuing capacity of up to N342 billion ($ 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, among others.
According to the CEO 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.