Tuesday, June 22, 2021

    Nigeria Wealth Fund targets $50 million equity for tech innovation fund using Sukuk Bonds Sale

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    Looks to boost exposure to venture capital, European stocks

    The Nigeria Sovereign Investment Authority plans to raise equity capital and sell sukuk bonds this year to fund technology and roads infrastructure in Africa’s biggest economy.

    The NSIA, one of Africa’s biggest sovereign wealth funds plans to inject $50 million equity into an innovation fund that develops technology infrastructure as well as sell sukuk to fund road projects, Uche Orji, chief executive officer, said in an online conference on Tuesday.

    It will seek co-investors to complement its planned equity injection in the innovation fund while the size of offering of Islamic finance assets “won’t be small,” Orji said, without mentioning the amount.

    The wealth fund’s assets under management Jumped 51% in 2020 to 981.9 billion naira ($2.4 billion) following a surge in earnings and additional capital contribution of $250 million from the government, last year.

    Its profit increased more than five folds to 160 billion naira from 36 billion naira owing to “strong performance” from investments in international capital markets, improved contribution from subsidiaries and foreign exchange gains, according to the fund head.

    The Abuja-based money manager plans to allocate more of its Future Generations Fund to venture capital, global equity markets and stocks in Europe where its exposure has been relatively low, the CEO said. “We believe the general opening of the market will be positive for Europe.”

    There are also opportunities in data centers, data networking, software, pharmaceutical and manufacturing industries in Nigeria, the chief executive said.

    The capital market is unlikely to repeat its performance in 2020 though it is still going to be a “strong year,” the chief executive said.

    Naija247news recalled that The federal government of Nigeria is set to spend US $405m Sukuk bond to finance 44 ongoing highway projects.

    Minister of State for Works and Housing, Engr Abubakar D. Aliyu disclosed the report and said that the funds will be issued by the Debt Management Office (DMO).

    The Minister explained that insufficient of funds, the federal government had to leverage on alternative sources of funding to finance infrastructure.

    He noted the 44 roads forms part of the over 500 road and bridge projects currently being undertaken by the Ministry as its contribution to infrastructure provision in the country. The government had already in 2017 and 2018 spent US $541m Sukuk bonds on 58 critical highway projects across the country.

    “This concerted and sustained effort in road infrastructure financing has positively impacted on the physical completion of many of the projects.

    Expansion, Reconstruction and Rehabilitation of Lagos-Ibadan road, Construction of Second Niger Bridge and the Rehabilitation of Abuja-Kaduna-Kano Dual Carriageway are being financed with the Presidential Infrastructure Development Fund (PIDF),” said Engr Abubakar.

    Also Read:Kenya to rehabilitate Muhoroni-Miwani–Kisumu road

    Sukuk bond
    The Minister applauded that the impact of Sukuk bond would be felt on nation building through job creation, growth and employment.

    Federal Government contractors would be the first beneficiaries, which would in turn trickle down to suppliers of building materials, artisans, miners and steel companies.

    Sukuk comes from the word Sakk, which means legal instrument, deed and cheque when translated. It can also mean to strike a deal on paper.

    The first Sukuk transaction took place in Damascus, Syria in the Great Mosque of Damascus back in the 7th century AD.

    Ownership of an asset is clearly shown in sakuk. The Shariah law plays a major role in ensuring that the assets that back Sukuk are of good moral standard.

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