ARM leads indigenous share financing of $1b power project

Modestus Anaesoronye  

The ongoing power sector reforms in the country is set for a boost as one of the leading indigenous financial services firm, Asset & Resource Management Company Limited(ARM)  leads in co-sponsorship and equity investment of $1 billion 450MW Azura-Edo IPP Project being developed near Benin City in Edo State, Nigeria.

Contracts and debt financing agreement for US$750 million transaction was completed Monday in Abuja, while a further US$300 million is being invested by Seplat Petroleum Development Company plc in new gas processing facilities at its Oben Gas Plant, which will supply the Azura-Edo IPP with the project's fuel gas requirements.

The financing comprises long term debt and equity committed by a consortium of local and international financiers led by the lead sponsor, Amaya Capital Limited, and co-sponsored by other equity investors including ARM.

The financing also incorporates a number of novel features for the Nigerian market, such as the financial support provided by the Federal Government of Nigeria through a Put and Call Option Agreement, the first Nigerian power project to benefit from the World Bank’s recently developed ‘Partial Risk Guarantee’ structure, specifically created to meet the developing needs of emerging markets worldwide, and political risk insurance for equity and commercial debt from the Multilateral Investment Guarantee Agency (MIGA), part of the World Bank group. 

The Azura-Edo IPP is the first of a new wave of greenfield project-financed IPPs under development in Nigeria, and comprises a 450MW open cycle gas turbine power station; a short transmission line connecting the power plant to a local substation; and a short underground gas pipeline connecting the power plant to the country’s main gas-supply. 

It represents the first phase of a 1,500MW power plant facility that is targeted to come on stream in 2017, and forecast to create over 1,000 jobs during construction and operation. 

The Engineering, Procurement and Construction (EPC) will be undertaken by Siemens and Julius Berger, with Operations & Maintenance by PIC Marubeni. ARM’s investment in the Azura-Edo IPP is planned to be made through the new US$250 million specialist Infrastructure Fund that ARM is setting up in partnership with Harith General Partners Proprietary Limited (“Harith”) of South Africa. 

Through the Fund, investors will be able to gain exposure to a wide variety of infrastructure assets across various sectors (transport, energy, and utilities) in West Africa, and primarily in Nigeria. 

The Fund is managed by an experienced, multi-disciplinary fund management team based in Lagos, with more than 60 years combined infrastructure experience in Sub-Saharan Africa and other parts of the world.

ARM recently celebrated its 20th anniversary of being in business.  Established in 1994 as an asset management firm, it has since evolved into one of Nigeria’s most innovative and respected non-bank financial institutions with focus on Traditional Asset Management and Specialised Funds. 

ARM has consistently distinguished itself through its superior research quality, asset management experience, and value-adding financial advisory services.  Its business comprises non-pension asset management, life insurance, pension fund administration, stock broking and execution services, trust services, real estate management and development, infrastructure finance and development, private equity, and hospitality and retail. 

Headquartered in Lagos, Nigeria, with offices across the country, ARM currently manages total assets of over US$3 billion. 

ARM is registered with the Nigerian Securities & Exchange Commission, and sponsored the pioneering Lekki Toll Road Concession in Lagos.  It was honoured by Capital Finance International as the “2013 Best Fund Manager in Nigeria”, and has AA- investment manager rating from Augusto & Co.  

Managing Director ARM Infrastructure, Opuiyo Oforiokuma said: “We are very pleased to be involved in a flagship project of the calibre of the Azura-Edo IPP, and to have a role in developing the project to this stage and investing equity in it.  Besides the superb efforts of the high-quality team of co-equity investors led by Amaya Capital, including ARM; and the impressive array of international and local banks involved in the debt financing; the level of collaboration from the Federal Government of Nigeria, the Edo State Government, and the local communities, has been highly commendable.  Africa, and West Africa in particular, needs more projects like this.  We see tremendous infrastructure investment opportunities throughout West Africa, and not only in the power sector. 

“Through our investment in the Azura-Edo IPP, ARM is pleased to be at the forefront of the effort to bring Nigeria’s power generation up to the standard required for the country to become globally competitive.”