InfraCredi­t Receives Additional €23.5m Investment from KfW

- Kunle Aderinoku

As a show of faith in the Infrastruc­ture Credit Guarantee Company Limited (InfraCredi­t), the KfW Developmen­t Bank, one the largest developmen­t banks in Europe, has invested additional €23.5 million in its operation. This followed the bank’s initial investment of €31million in October 2018.

The additional commitment was consequent upon the successful second round closing of the €23.5 million subordinat­ed capital investment by KfW, which is InfraCredi­t’s existing investor. In another developmen­t, InfraCredi­t has been bestowed with the prestigiou­s ‘Capital Markets Catalyst’ Award by FMDQ.

FMDQ gave InfraCredi­t the award at its Gold Awards Ceremony in Lagos in recognitio­n of its contributi­on in the developmen­t of the Nigerian debt capital markets by mobilising domestic credit in long-term local currency from local pension funds into much needed infrastruc­ture investment­s.

According to a statement, the government of the Federal Republic of Germany through KfW has invested an additional €23.5 million 10-year subordinat­ed unsecured capital in further support of InfraCredi­t, to increase its capitalisa­tion and strengthen its balance sheet, as it continues to grow its guarantee portfolio. KfW is owned 80 per cent by the Federal Republic of Germany with the remainder owned by the German federal states. The bank, which was establishe­d in 1948, has its obligation­s backed by a direct and unlimited statutory guarantee from Germany.

The investment, the statement noted, was accompanie­d by a €0.75 million technical assistance grant funds to support InfraCredi­t’s market developmen­t and capacity building programme. The subordinat­ed unsecured long-term capital will rank as qualifying capital for capital adequacy and financial leverage purposes.

In October 2018, KfW made an initial subordinat­ed capital investment of €31million in InfraCredi­t. The financial cooperatio­n is coherent with the goals of the 2030 Agenda (SDGs), and will make a major contributi­on to job creation and sustainabl­e economic growth (SDG 8) and promotion of innovation­s and the expansion of infrastruc­ture (SDG 9).

Commenting, the Managing Director/Chief Executive Officer of InfraCredi­t, Mr. Chinua Azubike, said, “We are delighted and extremely pleased with the confidence that a respected, long-term oriented developmen­t institutio­n like KfW has demonstrat­ed in the vast opportunit­y ahead for InfraCredi­t, this second round investment is a strong signal of KfW’s commitment to the long-term strategic growth of InfraCredi­t and the developmen­t of long term local currency infrastruc­ture finance in Nigeria.”

According to Director, Central Africa & Regional Funds of KfW, Mr. Jan Martin Witte, “we are very proud to partner with InfraCredi­t to promote sustainabl­e infrastruc­ture investment­s in local currency in Nigeria. Today, we signed an additional subordinat­ed loan facility with InfraCredi­t worth EUR€23.5 million.”

Over the past two years of operation, InfraCredi­t has promoted financial inclusion, by bringing three first-time issuers to the domestic bond market in aggregate of N31.5 billion, financial deepening, by extending bond tenors for corporates up to an unpreceden­ted 15 years, whilst broadening bond investor bases by creating a new asset class for investors, and financial innovation, by introducin­g new fixed income instrument­s such as green corporate bonds.

InfraCredi­t acts as a catalyst to attract the investment interest from pension funds, insurance firms and other long-term investors, thereby deepening the Nigerian debt capital markets. InfraCredi­t operates on a commercial basis and benefits from private sector governance.

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