Nigeria SEC Approves AFC Capital Partners $150M Climate Fund

• AFC Capital Partners has launched a $150 million Infrastructure Climate-Resilient Fund in Nigeria, approved by the Nigerian Securities and Exchange Commission.
• This SEC-registered closed-end fund aims to channel domestic institutional capital from pension funds, insurance firms, and sovereign wealth funds into green infrastructure.
• The initiative is part of a larger $750 million pan-African climate effort, targeting an overall project financing pool of $3.7 billion.
• The fund will prioritize investments in the transport and renewable energy sectors, with the first investment anticipated before year-end.
• Supported by the Green Climate Fund, the vehicle seeks to mitigate Africa's estimated $200 billion in annual climate disruption losses and address a significant infrastructure financing gap.

The regulatory endorsement from the Nigerian SEC marks a significant step for climate finance in the country, providing a regulated avenue for Nigerian institutional investor green infrastructure capital.

AFC Capital Partners, the asset management subsidiary of the Africa Finance Corporation, has officially launched its $150 million Infrastructure Climate-Resilient Fund in Nigeria, following crucial regulatory approval from the Nigerian Securities and Exchange Commission (SEC). This new SEC-registered closed-end fund Nigeria was formally established during a signing ceremony held in Lagos, designed specifically to channel domestic institutional capital into vital green infrastructure projects across the nation. The initiative forms a key component of a broader $750 million pan-African climate finance effort, with the Nigerian platform specifically aiming to attract investments from pension fund administrators, insurance firms, and sovereign wealth funds, contributing to an ambitious overall project financing pool of $3.7 billion.

Chika Dotimi-Beke, the Chief Financial Officer for AFC Capital Partners Nigeria Limited, emphasized that the immediate strategic focus is on capital raising and subsequent deployment. With the SEC approval now secured, the firm's primary objective is to onboard Nigerian institutional investors into the fund. Dotimi-Beke also indicated a swift progression to investment activities, anticipating the fund's first investment will be made before the conclusion of the current year. Following the successful first close for the Nigerian fund, priority will be given to investments within the transport and renewable energy sectors.

The regulatory endorsement from the Nigerian SEC marks a significant step for climate finance in the country, providing a regulated avenue for Nigerian institutional investor green infrastructure capital. Gbadebo Adenrele, who serves as the Managing Director and CEO of Investment Banking at United Capital Plc, and acted as the financial adviser and issuing house for the transaction, highlighted the substantial growth in domestic savings. He noted that Nigeria's investment pool, particularly within its pension funds, is currently estimated to be between N31 trillion and N32 trillion and continues to expand.

This expanding domestic capital base presents a crucial opportunity to address Africa's considerable infrastructure financing gap, which ranges annually from $130 billion to $170 billion. Adenrele underscored the imperative of de-risking projects to effectively attract a broader spectrum of investors, including institutional players, development finance institutions, and commercial banks, thereby facilitating pension fund investment climate projects Nigeria.

The urgent need for such a fund is underscored by the severe economic repercussions of climate change across the continent. David Johnson, the Chief Risk Officer for the Africa Finance Corporation, reported that Africa incurs an estimated $200 billion in annual losses directly attributable to climate disruptions. Within Nigeria, these impacts are acutely felt, with frequent flooding causing damage to critical road networks and leading to significant traffic delays. Moreover, rising temperatures contribute to accelerated wear and tear on existing transport infrastructure.

Johnson further explained that transport costs currently constitute nearly 40 percent of the total cost of goods in Nigeria. He emphasized that strategic investments in climate-resilient transport assets would not only reduce logistics expenses for businesses and consumers but also generate competitive returns for investors. To navigate potential project execution hazards and currency volatility, the AFC Capital Partners Infrastructure Climate-Resilient Fund will adopt a balanced portfolio approach, allocating capital across early-stage projects, mid-stage financings, and mature operational assets.

Ayaan Adam, the Chief Executive Officer of AFC Capital Partners, articulated that the Infrastructure Climate-Resilient Fund Nigeria offers institutional investors a dedicated and structured pathway into high-yield, climate-resilient assets. She highlighted the fund's innovative approach, which combines institutional capital with the Africa Finance Corporation’s established infrastructure expertise and the catalytic power of blended finance. This synergy is designed to address both the substantial financing requirements of critical infrastructure development and the escalating risks posed by climate change.

Crucially, the investment vehicle benefits from the strategic backing of the Green Climate Fund. This support includes the provision of first-loss capital and technical assistance, which are instrumental in de-risking investments and thereby encouraging greater participation from private finance. This collaborative model reinforces the broader objectives of Africa Finance Corporation climate finance Nigeria, aiming to build sustainable and resilient infrastructure across the region.

Lawyers advising Nigerian institutional investors (e.g., pension funds, insurance firms) should be aware of this new SEC-approved closed-end fund as a regulated avenue for deploying capital into climate-resilient infrastructure projects, necessitating due diligence on its structure and investment strategy. It also signals a growing trend in climate finance within Nigeria's regulatory landscape.

Source: Original reporting from industry news sources