First investment for Nigerian sovereign wealth fund

Nigeria’s $1 bn Nigerian Sovereign Investment Authority (NSIA) has made its first investment, handing $50 mn to UBS and another $150 mn to Credit Suisse and Goldman Sachs, reports the Financial Times.

Uche Orji, chief executive of the sovereign wealth fund (SWF), told the paper that UBS will invest the cash in US treasuries while Goldman Sachs and Credit Suisse build a US corporate bond portfolio. ‘This is a major milestone for us,’ says the former banker, who helped set up the SWF last year. 

Orji had previously delayed investment due to global market volatility, but told the FT he now believes the bond market to be ‘fairly valued’. ‘There is more optimism now,’ he explains. 

NSIA is the third largest SWF in sub-Saharan Africa, after Botswana’s $6.9 bn and Angola’s $5 bn funds, though all are dwarfed by those of big oil producers such as Saudi Arabia, Abu Dhabi and Norway, notes the paper. 

NSIA, which has a goal to ‘build a savings base for the Nigerian people, enhance the development of Nigerian infrastructure and provide stabilization support in times of economic stress’, according to the fund website, is split into three pools.

The stabilization fund has a 20 percent share – the $200 mn handed over to banks this week, according to the FT – while the future generations and infrastructure funds will each receive 32.5 percent, or $325 mn, with 15 percent remaining unallocated.

Orji told the paper he hoped the future generations fund, which aims for a long-term return of 4 percent above US inflation, would be up and running by the end of March next year. ‘We find quite a few asset classes, such as US equities, to be a bit rich at the moment,’ he said, expressing concerns over the rising valuations of developed world stock markets. ‘We see more value in emerging markets.’