Portfolio and track record

13.2 NSIA-NIF core governance bodies

for liquidity. The goal is twofold: first, ensure that no project or manager; regional, political, or economic events or circumstances; or infrastructure sector has a disproportionate impact on NIF’s aggregate results; second, ensure a more even spread of the benefit of the investment capital available to NIF. NIF cannot commit more than 25 percent of total assets to one project or manager or more than 35 percent to one infrastructure subsector in Nigeria. 2. Co-investments through funds managed by external managers, subject to a cap of 50 percent of total NIF assets. Allocation to external managers is also subject to concentration limits: no more than 10 percent of NIF assets can be allocated to a single, externally managed fund and no more than 20 percent to a single external fund manager. When co-investing with, or investing in, a third-party fund, NIF evaluates that fund’s expertise in the target sector, investment track record, and return potential. 3. Creation of institutions and financial services companies that fill the gap for infrastructure financing and other sectors of national importance in Nigeria.

NIF has a long-term investment horizon exceeding 20 years. This time frame allows it to navigate multiple economic and market cycles and focus on greenfield investments with a long gestation period. NSIA is willing to invest in projects that may not generate any cash flows and may require significant capital injections in the short term but produce attractive long-term returns.

Pending investments in long-term infrastructure opportunities, NIF can make short- and medium-term fixed-income investments with unspent funds. It can purchase only investment grade instruments with a maximum tenor of three years (board approval required for tenors of more than one year). These investments must be approved by the Investment Committee on the recommendation of the executive management.

NIF acts exclusively as a provider of new funding and invests across the capital structure, from senior secured debt down to equity. It does not buy out existing shareholders, refinance existing debt, or issue guarantees. Return expectations vary depending on the instrument invested. Except for investments categorized as development Projects, however, all have to comply with the 6 percent floor discussed previously.

NIF can incur leverage at either NSIA or project level. Leverage decisions are made by the direct Investment Committee on a project-by-project basis. debt issued by NSIA does not enjoy any implicit or explicit government guarantees. NIF may seek government guarantees on major infrastructure projects, but they have to be negotiated and the government is under no obligation to provide them.

Internal investment procedures are standardized. Investment officers use a standard valuation model and valuation materials, reviewed periodically by the Investment Committee.