InfraCo Africa, part of the Private Infrastructure Development Group (PIDG), has completed an approximately $27m equity investment into InfraCredit, a specialised local currency infrastructure credit guarantee institution based in Lagos, Nigeria.

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.

Gilles Vaes, CEO of InfraCo Africa, and Claire Jarratt, CIO of InfraCo Africa, will join InfraCredit’s Board of Directors.

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.”

“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 and promote economic growth in Nigeria,” he said.

GuarantCo and the Nigeria Sovereign Investment Authority (NSIA) established the Nigerian Infrastructure Credit Enhancement Facility (InfraCredit) in 2017 with support from PIDG Technical Assistance.

InfraCredit was established to act as a market champion for the development of the local debt capital markets and to mobilise long-term investment from local institutional investors (e.g. pension funds, insurance companies) and finance infrastructure projects in Nigeria in local currency.

Pursuant to the new equity investment, InfraCredit’s total capital base (paid-in and callable capital) will increase to $173m (c. NGN 68.3bn), translating to an aggregate guarantee issuing capacity of up to NGN 342bn (c. $865m) 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, amongst others.

Chinua Azubike, CEO of InfraCredit, 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.”