The International Finance Corporation (IFC), a member of the World Bank Group, has committed $50m in long-term subordinated debt to Infrastructure Credit Guarantee Company Plc (InfraCredit). This investment aims to expand InfraCredit's capacity to finance infrastructure development in Nigeria. The 10-year unsecured facility was formalised in Lagos and will be provided in two equal tranches of $25m each.
The financing is designed to strengthen InfraCredit's capital base and enable the company to support a growing pipeline of infrastructure transactions. This will also allow InfraCredit to mobilise more long-term funding in naira for projects across critical sectors of the Nigerian economy. These sectors include renewable energy, climate-smart agriculture, telecommunications, digital infrastructure, healthcare, transportation, and other investments aligned with sustainable economic growth.
The IFC investment is backed by the International Development Association Private Sector Window Blended Finance Facility and the Concessional Capital Window. InfraCredit provides credit guarantees for infrastructure-related debt transactions and said the additional capital would strengthen its ability to attract domestic institutional investment into projects requiring long-term financing. This transaction also reflects growing support from international development finance institutions for InfraCredit's role in deepening Nigeria's domestic debt capital market.
IFC's investment comes alongside support from a wider network of development finance institutions and other development partners. These arrangements include equity investments, subordinated debt, portfolio risk-sharing mechanisms, counter-guarantees, first-loss capital, specialised financing facilities, and technical assistance. According to InfraCredit, this combination of instruments has helped strengthen its financial leverage while allowing it to develop new financing structures and co-financing platforms for infrastructure projects.
Since beginning operations in 2017, InfraCredit has facilitated more than N600bn in long-term local-currency financing for 28 infrastructure projects. The company has also supported 14 first-time issuers in accessing Nigeria's domestic debt capital market. Its activities have included transactions that helped establish new benchmarks in the local bond market, including Nigeria's first 15-year green infrastructure bond.
InfraCredit-guaranteed transactions have also helped extend corporate bond maturities to as much as 20 years, providing infrastructure developers with access to financing over longer periods. The company's guaranteed infrastructure bonds have attracted significant participation from domestic institutional investors, including 20 of Nigeria's 25 Pension Fund Administrators. IFC's Financial Institutions Group Director for Africa, Aliou Maiga, said the investment would help strengthen Nigeria's infrastructure financing ecosystem.
Chief Executive Officer of InfraCredit, Chinua Azubike, said strengthening the institution's capacity had become increasingly important as its transaction pipeline expanded and its financing products evolved. He noted that the IFC facility would improve InfraCredit's ability to mobilise long-term domestic capital for infrastructure projects. Azubike also described the investment as evidence of continued confidence from international development finance institutions in InfraCredit's business model.
Key points
- IFC invests $50m in InfraCredit to boost Nigeria's infrastructure financing
- Investment aims to strengthen InfraCredit's capital base and support infrastructure development
- InfraCredit has facilitated over N600bn in long-term financing for 28 infrastructure projects since 2017
