Private Equity Firms Urged to Tap into Pension Funds


By Nume Ekeghe

The International Finance Corporation (IFC), which is a member of the World Bank Group has advised private equity firms in Nigeria to broaden their investment portfolios as well as tap into the pension funds.
In fact, the IFC revealed that its investment in Nigeria has been productive, saying that it is considering investment opportunities in the financial technology (fintech) and some other sectors.

The Country Manager IFC, Ms. Eme Essien stated this at the Private Equity Women Investor Network (PEWAN) roundtable in Lagos, where participants discussed the topic: “Will Private Equity Save Nigeria.”
Speaking at the round-table, Essien said: “Our experience with the funds we have invested in Nigeria has been relatively good. It is a mixed bag there is no question about it. Some have done better than others. In this particular environment, it is incredibly tough, there is no question about it but when things turn the corner, the interest would start to peak again. I expect Nigeria to peak quite significantly.”

She added: “I would say in terms of interest, fintech is quite interesting for us right now, real estate, and infrastructure and then every other thing falls down in terms of order of priority. The timing is a challenge but I think the opportunity for Nigeria remains vibrant and the question for us is how we keep investor interest strong.”
Speaking on the private equity space in Nigeria, the CEO of Progress Trust Limited and Executive Director at Nigerian Breweries Plc., Mrs. Titi Lawani, said: “I see private equity as a channel for opening up new industries.”
She also noted that there were various challenges in the sector.
Lawani added: “Looking at the challenges of private equity, exit is problem because even in developed countries where private equity does, typically, it is the Initial Public Offering (IPO) route that is the exit route that a lot of them take, and we have done very few IPO recently so for me, that is a concern.

“Second concern is that in developed countries where private equity is very mature, you find them structuring the deals such that equity, debt and so on such that within the capital itself you have five different routes so whichever way it goes, it is not a total loss. But you know Nigeria it is almost both you have equity or debt and if you begin to bring in all the other dimensions, institutional investors are not very familiar and open so for me that is a concern.”

According to her, another concern is the issue of valuation. She noted: “Valuation is very subjective and high in subjective. So that is an area that also gives fund managers concern. And most recently, FX has become a big problem.”
On her part, the Head of Investment, PAL Pension, Ms. Ambimbola Sulieman said: “One of the things the regulators are trying to do in trying to address some of the issues is having a lifetime funds. As of today, if you are 59 or 21 and just starting a job, you are in the same fund and we don’t have the multi fund structure.”

Also, a former Minister of Communication and Technology, Mrs. Omobola Johnson urged the operators to create a special fund to include agriculture value chain, and funds to support young entrepreneurs, who cannot access high interest rate loans from banks.

Johnson said: “I think that there is an opportunity to redefine some of what we are doing, create new products and services and address what we need to address which is young entrepreneurs starting businesses, creating jobs and unlocking wealth which is what can take us out of where we are now.”