Firm unveils SEC-approved $150m climate fund

AFC Capital Partners, the asset management arm of the Africa Finance Corporation, has officially launched its $150 million Infrastructure Climate-Resilient Fund in Nigeria. The fund has received regulatory approval from the Securities and Exchange Commission (SEC), marking a significant step in channeling domestic institutional capital towards green infrastructure projects across the country.

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The primary goal is to bring investors into the fund. Today marks the approval of our license from the SEC, so our focus is now on onboarding institutional investors.

This Nigerian fund is part of a broader $750 million pan-African climate initiative. It is designed to attract investments from entities such as pension fund administrators, insurance firms, and sovereign wealth funds. The ultimate goal is to unlock a total project financing pool of $3.7 billion for climate-resilient infrastructure development.

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We anticipate making our first investment before the end of the year. Once we achieve our first close for the Nigerian fund, we are set to prioritise investments in the transport and renewable energy sectors.

Chika Dotimi-Beke, Chief Financial Officer of AFC Capital Partners Nigeria Limited, stated that the fund's immediate focus is on capital raising and subsequent deployment. "The primary goal is to bring investors into the fund," she said, noting that with the SEC license secured, the onboarding of institutional investors is now the priority. Dotimi-Beke anticipates making the first investment before the end of the year, with a focus on the transport and renewable energy sectors once the Nigerian fund achieves its first close.

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Nigeria’s investment pool, especially within pension funds, is currently estimated at about N31tn to N32tn and is still growing.

The launch highlights the growing capacity of Nigeria's local market. Gbadebo Adenrele, Managing Director/CEO of Investment Banking at United Capital Plc, the financial adviser and issuing house for the transaction, pointed to the expansion of domestic savings, estimating Nigeria's pension fund pool at N31tn to N32tn and growing. He also addressed Africa's substantial annual infrastructure financing gap, estimated between $130 billion and $170 billion, emphasizing the need to de-risk projects to attract diverse investors. David Johnson, Chief Risk Officer of Africa Finance Corporation, underscored the economic impact of climate change, noting Africa suffers an estimated $200 billion in annual losses due to climate disruptions, which affect infrastructure like roads and transport networks.

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In Nigeria, flooding damages roads and causes severe traffic delays, while rising temperatures accelerate the wear and tear of transport networks. Transport costs currently make up nearly 40 per cent of the cost of goods.