Authorities at the Nigerian Sovereign Investment Authority (NSIA) on Monday announced that they would in June, begin investment of the stabilisation and future generation components of the nation’s $1billion Sovereign Wealth Fund (SWF), seven months after the body was inaugurated.
But investments of the infrastructure component would begin towards the end of the year and at the moment, a very detailed and thorough review of the possible investment areas and projects is on- going, Uche Orji, Managing Director/ Chief Executive Officer , NSIA told a press conference in Abuja.
Orji confirmed that for the initial $1 billion SWF portfolio, the Board of NSIA has approved an investment allocation formula to the three funds that make up the SWF in the ratio of 32.5 percent each for the future generation and Nigerian Infrastructure Funds, while the Stabilisation Fund gets 20 percent.
Consequently, $200 million would go into the stabilisation fund, $325 million would go into the future generation and infrastructure funds respectively, leaving about $150 million funds unallocated.
Orji said the idea is to allow fund managers the flexibility to top up each of the funds, as investment opportunities arise.
He observed that the future generation and infrastructure funds have been balanced with a view to recognising the need of the current
generation, which is infrastructure, and that of future generation, which is savings.
The allocation formula would be revisited by the board periodically as the need arises, he stressed, adding that the process would be transparent and publicised.
“Investment in the Stabilisation Fund will start in early June. The Future Generation Fund has the same timeline but will continue till the end 2013 because it is a more diversified portfolio with a more complicated process.
“For the infrastructure fund, a very detailed and thorough review of possible investment areas and projects is ongoing. The investments being considered are in healthcare, transportation, water resources, power, housing etc. Our focus is investments that are both relevant to the current needs of Nigerians and profitable and sustainable at the same time,” he explained.
Orji said so much work has gone into getting the NSIA operation, which according to him is quite faster compared to those of the nation’s peers across the world.
On how the funds would be managed, Orji explained that the Stabilisation Fund would start out outsourced, and soon transit to an in-house management.
He explained that the reason this particular component is being outsourced is because it would take some time to do the infrastructure to trade domestically.
He said this fund has the objective to be invested in safe, liquid instruments with the idea of capital preservation. The reporting currency would be the US dollar and it is about safe liquid instruments and consequently, things like treasuries and investment corporate bonds would also be looked at.
For the Future Generations Fund, which he described as very broadly diversified, about 60 percent of it would be invested in publicly related securities, both fixed income and equities and both of which would also be domestic and international. Forty percent would be involved in what he called ‘unlisted securities’ which would include private equity, infrastructure and real estate .
ONYINYE NWACHUKWU, Abuja