US fund to raise $2bn for Nigerian infrastructure

A United State fund manager, Pecora Capital, says it will raise $2bn over the next 18 months for Nigerian infrastructure projects, a rare show of investor confidence during a period of deep crisis in the country.

This is coming at a time when President Muhammadu Buhari is trying to attract foreign direct investment to help support the economy that slipped into contraction in the first quarter of 2016 as lower oil prices had drastically impact national earnings.

A string of attacks on oil pipelines by militants in the restive Niger Delta has compounded the country’s economic problems and many investors have complained about the poor current business environment.

“As a long-term investor we see a time of crisis as an opportunity,” the Managing Director of Pecora, Aaron Smith, told Reuters.

He expected the fund to achieve returns of 25 per cent a year over its seven-year lifespan.

A more than halving of oil prices since 2014 has sapped the supply of foreign currency in Nigeria, making it difficult for businesses to import basic equipment or for foreigners to repatriate dollars, raising the risks for investors.

The country still relies on oil exports for around 90 per cent of foreign exchange earnings and 70 per cent of government revenues.

“I understand that is a concern and we’ve thought about it but we definitely don’t foresee over the timeframe we’ve set out that we’ll have any problems getting money out of the country,” Smith said, adding that, “The fundamentals and demographics in Nigeria, in terms of population, in terms of infrastructure deficits, all offer huge opportunity and the availability of high returns.”

Pecora is a privately-owned firm and does not disclose its assets under management or previous performance, he said.

Smith said areas of possible investment included agriculture, telecommunications and transport as the fund hopes to take advantage of the huge demand for improved infrastructure in a country of around 190 million people.