GuarantCo, part of the Private Infrastructure Development Group (PIDG), has provided a N20.23 billion ($25 million) counter-guarantee with a sixteen-year tenor to Infrastructure Credit Guarantee Company Limited (InfraCredit) in support of Lagos Free Zone Company’s (LFZC) three guaranteed infrastructure bond issuances totalling N53 billion ($65.5 million).
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This transaction is part of a larger guarantee facility fronted by InfraCredit to support the bond programme. Owned and developed by Tolaram, Lagos Free Zone Company (LFZC) raised the funds to finance continued development of the Lagos Free Zone (the Zone) which is being developed as the largest integrated port based economic zone in Nigeria and shall serve as the industrial and maritime hub for Nigeria and West Africa.
All three issuances have been fully guaranteed by InfraCredit, the Nigerian based credit guarantor which GuarantCo and the Nigerian Sovereign Investment Authority[SI1] helped set up in 2017 and in which InfraCo Africa, another PIDG company, is a shareholder. To manage single obligor limits, InfraCredit initiated the counter-guarantee partnership with GuarantCo across all three series.
LFZC is the infrastructure development subsidiary of Tolaram, the Singaporean conglomerate with more than 45 years of presence in Nigeria and business interests in consumer goods, infrastructure and fintech. Enterprises operating in the Zone will benefit from various policy incentives underpinned by the Nigeria Export Processing Zones (NEPZ) Act, the legislative framework applicable for free zones in the country. In line with its vision to be the preferred industrial hub in West Africa, with world-class infrastructure, the Zone is equipped with a host of shared industrial infrastructure necessary for attracting investments from the leading trade partners of Nigeria.
Integrated with the Zone is the Lekki Deep Seaport, which was commissioned by former Nigerian President Muhammadu Buhari on 23rd January 2023 and started its commercial operations in April-2023. The proximity to the seaport, the industrial infrastructure within the free zone and the fiscal incentives under NEPZ Act, are expected to lower the barriers to entry for international businesses and create significant savings. LFZC has already attracted c. USD 2.5 billion dollars of investments and is projected to stimulate new sectors in the Nigeria economy, contributing to Sustainable Development Goal 9: Promote inclusive and sustainable industrialisation.
Layth Al-Falaki, CEO of GuarantCo, said: “We are delighted to have counter-guaranteed the bond issuance of Lagos Free Zone Company to the benefit of the economy and local people in Nigeria and West Africa. This is also our first joint transaction with InfraCredit, which we and the Nigerian Sovereign Investment Authority helped set up in 2017. We are very happy to see the impressive progress that InfraCredit Nigeria has made in the past six years and this joint transaction will be an important pathfinder for GuarantCo’s relationships with other local Credit Enhancement Facilities, including InfraZamin in Pakistan and others in the pipeline, that our parent company PIDG, with the support of its companies, has or is planning to set up.”
Chinua Azubike, CEO of InfraCredit, said: “One of the key strategies of InfraCredit towards addressing the significant infrastructure financing deficit in Nigeria is to expand our guarantee capacity through risk sharing partnerships with development finance institutions, by leveraging their capacity to share our long-term risks. The Counter-Guarantee provided by GuarantCo to support the Lagos Free Zone Company will strengthen our capacity to underwrite larger infrastructure projects and mobilise more domestic credit from local institutional investors to support impactful infrastructure projects in Nigeria that will support more jobs and accelerate economic growth.”
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Ashish Khemka, CFO of Lagos Free Zone, said: “We value our partnership with GuarantCo and InfraCredit towards the common goal of realising enabling infrastructure projects in emerging markets like Nigeria. Lagos Free Zone and Lekki Port projects are a testament to our commitment to change the paradigm of the ease of doing business in Nigeria and we appreciate the critical role played by credit guarantee programs run by GuarantCo and InfraCredit in enabling our access to long term credit required for such projects.”
