InfraCredit, a specialised local currency infrastructure credit guarantee institution, has announced the completion of a $27 million equity investment by InfraCo Africa, part of the Private Infrastructure Development Group (PIDG).
InfraCo Africa’s equity investment makes it an equivalent shareholder alongside the Nigeria Sovereign Investment Authority (NSIA) and Africa Finance Corporation.
On account of this investment, Chief Executive Officer (CEO) of InfraCo Africa, Gilles Vaes, and Chief Investment Officer of InfraCo Africa, Claire Jarratt, will join InfraCredit’s Board of Directors.
Commenting, Vaes, said: “Our equity investment in InfraCredit marks the first major transaction of our dedicated investment vehicle, InfraCo Africa Investments. 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.”
According to him, InfraCredit’s innovative model promotes capital flows from Nigerian institutional investors into local infrastructure developments.
“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 andpromote economic growth in Nigeria,” Vaes added.
Also commenting, the CEO of InfraCredit, Chinua Azubike said: “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. We believe this equity investment marks a significant milestone and inflection point for InfraCredit in unlocking more infrastructure investments that will stimulate economic growth and market development. With the economic impact of COVID 19, our essentiality in deepening the domestic bond market and mobilising private capital for infrastructure investments has never been more timely and important than it is today, as the Nigerian economy shifts towards recovery.”
Pursuant to the new equity investment, InfraCredit’s total capital base (paid-in and callable capital) will increase to $173million (N 68.3 billion), translating to an aggregate guarantee issuing capacity of up to N342 Billion ($ 865 million) based on its current maximum capital leverage ratio of up to 5x allowable by its rating agencies.
It is believed that 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 of the economy.