• Tuesday, March 19, 2024
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NSIA eyes Sukuk bond market, as comprehensive income surge 343%

105, 000 tonnes of fertilizer inputs arrive Nigeria June 3 – Orji

The Nigeria Sovereign Investment Authority (NSIA) has announced a 343 percent growth in Total Comprehensive Income to N160.06 billion in 2020 as against N36.15 billion the previous year.

NSIA managing director, Uche Orji said on Tuesday that the Authority’s investments in international capital markets, improved contribution from subsidiaries and affiliates and exchange gain from foreign currency positions drove such strong performance despite the challenges of Covid-19 last year.

He also hinted at plans to launch into the Sukuk bond market to raise additional capital for the several road projects under their management.

“We believe we would be coming to the market this year, most likely via the Sukuk programme. We are in preparation for this to help us complete the road projects,” Orji stated as he presented the 2020 Audited financial statement.

Excluding devaluation gain of N51billion, the NSIA reported core income of N109billion compared to N33.07 billion in 2019. This is the 8th year of straight profit by the NSIA which manages Nigeria’s well over $1.6bn Sovereign Wealth Fund. It equally achieved a 51 percent growth in Total Assets to N981.78 billion from N649.85 billion in 2019 and reported a 33% growth in Net Assets to N772.75 billion from N579.54 billion.

“All financial numbers were very strong for us. And this is because our investment strategies, especially in the capital market paid off for us in 2020 and we were able to generate remarkable income from all core investment activities,” Orji announced at a virtual press conference Tuesday morning.

Even though 2020 showed impressive results for NSIA, Orji, however, is of the view that this is not a pointer to a bullish 2021, however, the “fund is positioned well,” he insists. The NSIA manages Nigeria’s Sovereign Wealth Fund under three broad classes – the Future Generation, Stabilisation and Infrastructure Funds.

In 2020, it received an additional contribution of US$250 million from government and provided first stabilisation support to the FGN of US$150 million withdrawn from Stabilisation Fund. It equally received US$311 million from funds recovered from late General Abacha from the US Dept of Justice and Island of Jersey for deployment towards the Presidential Infrastructure Development Fund (PIDF) projects of Abuja-Kaduna-Kano Highway, Lagos Ibadan Expressway, and Second Niger Bridge.

Orji explained that under the Future Generations Fund, the NSIA significantly changed the asset allocation strategy, and expanded the stable hedge fund managers. It also made commitments in the Venture Capital sector and commenced direct trading and co-investments in equities with selected VC and private equity managers.

The asset classes which were top performers for the year include, Venture Capital investment returns which were up 29 percent in US$ terms; Hedge Funds which went up 11 percent; Emerging Long Only Equity Mangers was also up by 22 percent; Developed Long only equity managers up 19 percent; and Private Equity up 13 percent for the year.

Some managers in the long only asset classes were up more than 50 percent in the year as most took advantage of the supportive environment provided by central banks.

Orji observed that the only underperforming asset classes were other diversifiers, which among other investments such as healthcare royalties, commodities, and real estate, includes commitments to Aircraft leasing funds which had an understandably poor year due to the impact of covid-19.

“NSIA expects these funds will recover eventually, having had a solid performance in the past years,” he said.

The NSIA liquidated some investments in the Stabilisation Fund in 2020 to meet the US$150m redemption that augmented the July 2020 FAAC to all 3 tiers of government. The fund the equally delivered decent performance given the economic climate and ultra-low interest rates set by central bankers, he equally noted.

Covid-19 adversely affected logistics around infrastructure projects especially the toll road projects and the presidential fertilizer initiative. On the outlook for 2021, NSIA believes the market is unlikely to repeat some of the bullish performance of 2020, and sees a likelihood of a broader market recovery with economies opening up unlike last year when technology stocks drove market performance.

In the Future Generations Fund, the Authority hopes to allocate more capital to venture capital, global equity markets and increasing exposure to European equities where it had been underexposed in 2020, with a firm belief that broad opening of the markets will provide a comprehensive lift to equities.

On the strategic plans for the year, Orji further expressed expectations to complete concession, raise capital and operationalise the three PIDF road projects: Lagos-Ibadan Expressway, Second Niger Bridge, and Abuja-Kaduna-Kano Highway.

The Authority equally anticipates breaking ground on the Ammonia and Diammonium Phosphate Plant joint venture with Morocco OCP.

“In Nigeria Infrastructure Fund, the Innovation Fund is expected to be very active as we see opportunities in data centres, data networking, software, pharmaceutical manufacturing, and many others,” Orji explained.

According to him, despite concerns around new waves of Covid-19, the Authority remains confident that with widespread vaccination programs, global economies will continue to reopen and create more opportunities to create value by the NSIA.