GuarantCo provides NGN 20.23 billion (USD 25 million) counter-guarantee to InfraCredit for Lagos Free Zone Company 20-year senior guaranteed fixed rate infrastructure bond issuance

  • Date written
  • November, 2023

GuarantCo, part of the Private Infrastructure Development Group (PIDG), has provided an NGN 20.23 billion (USD 25 million) counter-guarantee with a sixteen-year tenor to InfraCredit in support of Lagos Free Zone Company’s (LFZC) three guaranteed infrastructure bond issuances totalling NGN 53 billion (USD 65.5 million).

GuarantCo provides NGN 20.23 billion (USD 25 million) counter-guarantee for Lagos Free Zone

This transaction is part of a larger guarantee facility by InfraCredit to support the bond programme. Owned and developed by Tolaram, 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 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.”

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.”

Layth Al-Falaki, CEO GuarantCo; Chinua Azubike, CEO InfraCredit; Lucinda O’Gorman, Associate Director GuarantCo and Tola Odukomaiya, Investment Director - North, West and Francophone Africa Lead GuarantCo

NOTES TO EDITORS

In addition to InfraCredit Nigeria, PIDG set up InfraZamin Pakistan in 2021 and is currently in the process of setting up a facility in Kenya.  The Credit Enhancement Facilities seek to address gaps in the local infrastructure financing market through increased use of credit guarantees similar to what GuarantCo does in lower income countries across Africa and Asia.

About GuarantCo

GuarantCo mobilises private sector local currency investment for infrastructure projects and supports the development of financial markets in lower income countries across Africa and Asia. GuarantCo is part of the Private Infrastructure Development Group (PIDG) and is funded by the governments of the United Kingdom, Switzerland, Australia and Sweden, through the PIDG Trust, the Netherlands, through FMO and the PIDG Trust, France through a stand-by facility and Global Affairs Canada through a repayable facility. GuarantCo is rated AA- by Fitch and A1 by Moody’s. GuarantCo’s activities are managed by GuarantCo Management Company which is part of Cardano Development www.guarantco.com

 

About PIDG

The Private Infrastructure Development Group (PIDG) is an innovative infrastructure project developer and investor which mobilises private investment in sustainable and inclusive infrastructure in sub-Saharan Africa and south and south-east Asia. PIDG investments promote socio-economic development within a just transition to net zero emissions, combat poverty and contribute to the Sustainable Development Goals (SDGs). PIDG delivers its ambition in line with its values of pioneering, partnership, safety, inclusivity and urgency. PIDG offers Technical Assistance for upstream, early-stage activities and concessional capital; its project development arm – which includes InfraCo Africa and InfraCo Asia – invests in early-stage project development and project and corporate equity. PIDG credit solutions include EAIF (the Emerging Africa Infrastructure Fund), one of the first and more successful blended debt fund in low-income markets; GuarantCo, its guarantee arm that provides credit enhancement and local currency solutions to de-risk projects; and a growing portfolio of local credit enhancement facilities, which unlocks domestic institutional capital for infrastructure financing. Since 2002, PIDG has supported 211 infrastructure projects to financial close, which provided an estimated 222 million people with access to new or improved infrastructure. PIDG is funded by the governments of the United Kingdom, the Netherlands, Switzerland, Australia, Sweden, Germany and the IFC. www.pidg.org

 

About InfraCredit

InfraCredit is an AAA rated specialised infrastructure credit guarantee institution backed by the Nigeria Sovereign Investment Authority, GuarantCo (a Private Infrastructure Development Group company), KfW Development Bank, Africa Finance Corporation, InfraCo Africa and African Development Bank, to provide local currency guarantees and mobilize long term debt financing for infrastructure in Nigeria. InfraCredit’s guarantees act as a catalyst to attract domestic credit from pension funds, insurance firms and other long-term investors into credit-worthy infrastructure projects, thereby deepening the Nigerian debt capital markets. InfraCredit operates on a commercial basis with a developmental role and benefits from private sector governance.
InfraCredit maintains the highest domestic financial strength ratings accorded to any financial institution by Agusto and Co. and Global Credit Ratings Co., two of the major domestic credit rating agencies www.infracredit.ng

 

About Lagos Free Zone Company

Incorporated under the provisions of Nigeria Export Processing Zones Authority (NEPZA) Act of 1992, Lagos Free Zone Company (“LFZC”) was established in 2002 and commenced operations in 2008. Promoted by Tolaram , a Singapore based Conglomerate, LFZC is granted the right to privately develop and manage the Lagos Free Zone, located at Ibeju Lekki, Lagos. With a deep focus on the ease of doing business, Lagos Free Zone makes it attractive and possible for businesses to “Make in Nigeria for Africa” by providing a world-class industrial ecosystem integrated with Lekki Port, Nigeria’s most modern and deepest seaport. www.lagosfreezone.com

 

About Tolaram

Tolaram is a Singapore enterprise focused on investing in emerging market opportunities that propel growth and elevate communities. We have been in business in Africa for over 45 years and are the largest FMCG company in Nigeria today. We take an ownership mindset across our diverse portfolio of businesses in Consumer Products, Infrastructure, and Fintech, allowing us to drive operational excellence throughout our enterprises across the emerging markets of Africa, Asia, and beyond. www.tolaram.com