AfDB to invest $10 million in Chapel Hill Denham’s infrastructure fund

18 Oct 2018, 12:00 am
Financial Nigeria

Summary

The fund invests in infrastructure companies, projects or SPVs that facilitate investment in infrastructure.

Wale Shonibare, Director of Energy Financial Solutions, Policy and Regulations, African Development Bank

The Board of Directors of African Development Bank (AfDB) has approved a $10 million investment in the naira-denominated Nigeria Infrastructure Debt Fund (NIDF) of Chapel Hill Denham, a leading investment bank in Nigeria.

Launched in June 2017 and listed on the FMDQ OTC Securities Exchange, the NDIF is the first listed infrastructure debt fund in Nigeria and Sub-Saharan Africa. The fund invests in loans, securities and securitized debt instruments of infrastructure companies or projects. It also invests in special-purpose vehicles (SPVs), which are created to facilitate or promote investment in infrastructure.

According to a statement released on Wednesday by the AfDB, the fund aims to meet Nigeria’s infrastructure needs by investing in such sectors as power and energy. The AfDB’s investment will be financed through its ordinary capital resources allocated for private sector operations.

“The Bank’s (AfDB) investment in NIDF will serve as a demonstration, crowding-in other Nigerian industrial investors,” said Amadou Hott, AfDB’s Vice President for Power, Energy, Climate Change and Green Growth. “This will enable the Bank to fill critical gaps in infrastructure financing, especially in the energy sector.”

In December last year, the Nigerian Sovereign Investment Authority (NSIA) announced an investment of $5 million in the NIDF. AfDB expects its investment in the fund to unlock up to N134 billion from the private sector, especially from pension fund administrators who have already invested N15.4 billion in NIDF.

“NIDF is addressing the issues of currency and tenor mismatch in infrastructure projects in Nigeria by providing loans that are denominated in the local currency, Naira, with proceeds in Naira, and also closely matching the loan tenor to the life of the asset,” said Wale Shonibare, Director of Energy Financial Solutions, Policy and Regulations at the AfDB.

The fund also aligns with the AfDB’s New Deal on Energy for Africa, which was launched in 2015. The landmark initiative was designed to solve Africa's huge energy deficit by 2025. The initiative is also part of the AfDB's Light Up and Power Africa campaign, which is among the Bank's five key priority areas, also referred to as the High 5s. The other High 5s are: The Feed Africa strategy; Industrialize Africa; Integrate Africa; and Improve the Quality of Life for the People of Africa. 


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