ARM to launch Nigeria’s first infrastructure fund with $250m

By Chijioke Ohuocha

LAGOS (Reuters) – Nigeria's ARM Infrastructure is close to raising $250 million in the country's first infrastructure fund, to invest in transport, energy and utility sectors across West Africa, with much of the money coming from pension funds, its managing director said.

ARM said the fund was expected to close by mid-August and was at the documentation stage with various investors including some Nigerian pension funds and other institutional investors such as the African Development Bank, Opuiyo Oforiokuma said.

Nigeria, Africa's most populous nation and home to 170 million people, requires around $50 billion a year for the next decade to develop badly needed infrastructure, especially for power, roads and water, to help boost economic growth.

Nigeria's pension assets have grown to $25 billion in 2014, from under $4 billion seven years ago, as the government targets schemes to try to encourage domestic savings. But the funds have traditionally invested in debt and equity portfolios.

"We are setting up a new infrastructure fund … (The) target fund size is $250 million. This will be the first time pension funds are actually going to invest in infrastructure," Oforiokuma said on the sidelines of a pension funds conference in Abuja.

ARM is a financial services firm with interests in real estate, insurance and capital markets. It developed Nigeria's first toll road under a private-public partnership in the commercial hub ofLagos.

The fund will target equity stakes in airport and sea port projects across West Africa, and invest for a period of 12 years, targeting investment returns of 18-20 percent over the period.

"We don't have basic roads, power supply and water. All of these have significant consequences for the economy, the social well being (of Nigeria)," Oforiokuma said, adding that Nigeria generates around 4,000 megawatts of electricity, compared with Brazil, which generates 100,000 megawatts.