The Nigeria Sovereign Investment Authority (NSIA), manager of Nigeria’s sovereign wealth fund, has signed a $700 million (about N224.17 billion) real estate and agriculture deal with South Africa’s Old Mutual Investment Group (OMIG).
Under the deal, signed in Abuja at the weekend, NSIA will partner with South Africa’s OMIG UFF Agri-Fund to establish a $500 million real estate co-investment vehicle and a $200 million agriculture co-investment vehicle.
NSIA’s Managing Director, Uche Orji said the deal would cover retail assets, especially office buildings.
He said: “The objective is to invest $500 million in commercial and retail assets, especially office buildings and hospitality facilities. The vehicle is expected to have initial commitments of up to $100 million each from NSIA and Old Mutual and is targeting a total commitment size of $500 million with deal origination and execution to be undertaken jointly by both parties.
“(For that of agriculture), both parties will make commitments for an initial vehicle size of $50 million ahead of the targeted size of up to $200 million, with deal origination and execution to be undertaken jointly by NSIA and UFF Agri-Fund. The aim of the agreement is to improve Nigeria’s food security and promote rural economic development to capitalise on the growing opportunities that the Nigerian agricultural industry provides.”
NSIA and OMIG’s interest in the real estate and agriculture sectors Orji explained “is underpinned by a shared vision of the significant opportunities presented by both sectors, given a number of advantageous socio-economic trends prevalent in Nigeria”.
On the significance of the agreement, Orji said: “The real estate and agriculture sectors offer considerable potential for economic growth in Nigeria. Our commitment in these sectors is underpinned by the economic imperatives of urbanisation, population growth and enhancement of liquidity for the sectors. The real estate vehicle once created alongside the agriculture vehicle will be configured to address some of these issues. The NSIA will continue to serve as a catalyst for private sector involvement in key sectors of the economy by exploring partnerships with credible entities such as Old Mutual Investment Group and UFF Agri-Fund.”
Minister of Finance, Mrs Kemi Adeosun said the agreement signing “marks a critical milestone towards delivering on NSIA’s broader mandate to invest in key sectors of the economy. It is consistent with the Administration’s concerted efforts to diversify the Nigerian economy away from oil and attract investments into other core sectors which can stimulate sustainable growth.”
OMIG CEO, Diane Radley, said the partnership with NSIA is a critical step in the development of OMIG’s commercial real estate and agriculture strategies in Africa.
“As the largest manager of real assets in Africa, we have a deep belief in the opportunities in agricultural and real estate investment across the African continent. Our dealings with agriculture as an asset class have shown that it has already gained huge momentum globally but is still in its infancy in Africa. This presents a significant investment opportunity for both local and international investors,” she said.
This experience, combined with NSIA’s significant local knowledge and capacity in the real estate and agriculture sectors of the Nigerian economy, Radley said allows for a formidable partnership that can add significant value to both partners’ clients as well as the development of the Nigerian economy.
For the NSIA – Old Mutual $500million Real Estate Co-Investment vehicle, the vehicle will be established as a private investment holding company, with joint ownership between NSIA and Old Mutual Property (OMP). Each party will commit an initial $50 million-with the opportunity to increase capital commitment to $100 million each, as and when further funding is required.The Vehicle intends to seek third party investors.
The vehicle will offer investors an opportunity to access high yield retail and commercial real estate investment opportunities in Nigeria, leveraging NSIA’s market presence, with an experienced co-sponsor real estate team.
Old Mutual Property is considered to be a leading developer of real estate in Africa with over 40 years’ experience in developing landmark shopping centres, industrial parks and major office blocks on the continent.
With estimated assets under management (AUM) of $1.3 billion as at April last year, Old Mutual Property is one of the specialist boutiques within Old Mutual Investment Group, Africa’s largest private sector investment manager with over $44.6 billion in AUM.
NSIA’s investment will be made through a wholly owned subsidiary, NSIA Property Investment Company Ltd (NPIC) while OMP’s investment will be made through its wholly owned subsidiaries. Assets will be substantially de-risked, either through leases or robust downside protection.
The vehicle is expected to have substantial development impact in a number of ways including: to cater for the rapid population growth and urbanisation of the major cities in the country that require such projects; direct and indirect employment benefits due to liquidity created for developers to pursue subsequent construction projects; open up the real estate market and the economy for inflow of greater investments and; absorb the current demand in the market for commercial office spaces allowing for increased business productivity in the economy.
On the NSIA-Old Mutual $200 million agriculture co-investment vehicle, the NSIA and Old Mutual Investment Group are establishing a $200million co-investment vehicle targeting the agriculture sector in Nigeria.
NSIA’s commitment to the vehicle is $25 million, with matching capital from Old Mutual bringing the first close to $50 million. Additional capital of $150 million is then expected to be raised from third party investors, bringing the Vehicle to a final close of $200 million.
The investment focuses on primary production, processing, and logistics. It will have an important social investment component, investing in rural development, food security, import substitution, and other areas in the sector that are beneficial to Nigerians with the NSIA and UFF African Agri-Investment managing the Vehicle.
UFF African Agri Investments (UFF) is the agriculture management company of Old Mutual Investment Group, Africa’s largest private sector investment manager with over $44.6 billion in assets under management.