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NIDF delivers over 55% total returns to investors

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Chapel Hill Denham Nigeria Infrastructure Debt Fund

The Chapel Hill Denham Nigeria Infrastructure Debt Fund (NIDF) has marked its second anniversary, delivering over 55 per cent of returns to unitholders during the period.

It also announced its eight consecutive quarterly distribution, of N4.34 per unit for the second quarter of 2019, making a total distribution of N4.67 billion in cash, amounting to N33.86 per unit to NIDF unitholders since inception.

In the short period of operations, NIDF has emerged as the largest provider of long-term Naira financing for commercially viable infrastructure projects across Nigeria.

Its current portfolio of N31 billion (c$100 million) includes a dozen infrastructure loans with 20 underlying projects and businesses.

These projects are in multiple sectors, including power generation, energy infrastructure, transportation, telecom, and social infrastructure, and spread across the country.

Lack of availability of long-term funding in domestic currency has been the bane of infrastructure development across Africa, including Nigeria.

Foreign currency financing, particularly debt financing, creates unsustainable mismatches between the currency of revenue and the currency of financing, leading to both higher costs to end-users and also macroeconomic risks for the country.

NIDF has successfully demonstrated the strength of its model (mobilising domestic savings for funding infrastructure) and how generating solid financial returns can go hand-in-hand with positive development outcomes.

For instance, in 2018, NIDF-funded projects achieved CO2 reduction of more than 500,000 tonnes and diverted nearly 10 million SCM (standard cubic meters) of flared natural gas to commercial use in the country.

The NIDF model is not only highly scalable but also replicable across other emerging markets.

The infrastructure investment gap for these markets over the next decade is huge, with Africa itself requiring
over a $1 trillion.

Domestic savings have to play a much greater role in bridging this gap than has traditionally been the case. This can be done only if the investors are offered superior risk-adjusted returns, coupled with low intermediation costs, liquidity and governance transparency, which are the distinguishing features of NIDF.

It is a case study on how a capital markets-led and scalable structure could be deployed widely in Africa and emerging markets more generally.


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