FSD Africa Investments (FSDAi), a specialist development finance investor backed by the UK, has announced a significant investment of £10 million (approximately $13.2 million) into ARM-Harith’s Climate and Transition Infrastructure Fund. This strategic investment aims to unlock local institutional capital specifically for climate infrastructure projects in Nigeria.
The investment from FSDAi introduces an innovative financial solution that addresses a persistent challenge faced by Nigerian pension funds in the realm of infrastructure equity finance: the need for early liquidity while investing. Traditionally, domestic institutional investors have been hesitant to engage in this asset class due to the lack of predictable interim distributions during the initial phases of investment. By facilitating these early returns, FSDAi’s initiative directly confronts a major barrier that has historically prevented local institutional capital from entering the infrastructure sector.
Moreover, a noteworthy aspect of this investment is that 75% of the FSDAi facility will be provided in local currency. This pioneering approach is specifically designed to mitigate the adverse effects of foreign exchange volatility that often impact pension funds. By structuring the investment in this manner, FSDAi anticipates unlocking an additional £31 million in contributions from pension funds, which is nearly five times the level of participation achieved in ARM-Harith’s inaugural fund.
Anne-Marie Chidzero, FSDAi’s Chief Investment Officer, expressed enthusiasm about the collaboration, stating, “We are thrilled to collaborate with ARM-Harith to showcase how risk-bearing capital from a market-building investor like FSDAi can be strategically structured to unlock domestic institutional capital. This approach strengthens Africa’s financial markets and facilitates capital allocation towards sustainable, green economic growth across the continent.”
In response, ARM-Harith CEO Rachel Moré-Oshodi highlighted the significance of this initiative, saying, “For too long, domestic pension funds have remained on the sidelines of infrastructure equity due to liquidity constraints and heightened perception of risk. We are proud to have collaborated with FSDAi to design a pioneering solution that reduces risk for pension funds while delivering both early liquidity and long-term capital growth. This is a global first – a groundbreaking private sector-led solution that could fundamentally change how infrastructure equity is financed – not just in Nigeria, but across Africa.”
This collaboration between FSDAi and ARM-Harith represents a transformative step towards enhancing the participation of local institutional investors in infrastructure projects, ultimately contributing to sustainable economic development across the continent.
