In a move to provide a new financing solution to the Nigerian oil and gas service sector and accelerate local content growth, the Nigerian Content Development and Monitoring Board (NCDMB) and the Bank of Industry (BOI) have inaugurated the Investment Committee of the Nigerian Content Equity Fund (NCEF).
The fund is a groundbreaking $100 million financing product designed to avail long-term financing to service companies and provide access to funds in exchange for equity rather than traditional debt instruments.
The committee was inaugurated in Lagos by the Executive Secretary of NCDMB, Mr. Felix Ogbe, setting the stage for the rollout of the pioneering financing window under the Nigerian Content Intervention Fund (NCI Fund), a statement signed by NCDMB’s General Manager, Corporate Communications, Dr. Obinna Ezeobi, said.
According to the product paper, the underlying goal of the Nigerian Content Equity Fund (NCEF) is to reduce per-unit cost of oil and gas products and services locally, create an additional source of income for NCDMB, and play a catalytic role in attracting other investors and lenders to financially viable organizations.
“By providing access to equity financing, the NCEF will enable service companies to expand and increase their market share, which will contribute to the growth of the Nigerian oil and gas industry,” the paper further read.
The statement said the Fund size is $100 million, while the obligor limit is $5million.
It added the Fund is provided by the NCDMB, while the BOI serves as the Fund Manager.
The target beneficiaries are oil field service companies, manufacturers connected to the oil and gas sector, fabrication yards, and connected sectors, with the primary goal being to promote economic growth, job creation, and wealth creation in Nigeria.
NCDMB estimated that the impact of the Fund on oil and gas projects could potentially create about 12,500 direct jobs and 7,000 indirect jobs.
The inauguration of the investment committee marks another milestone in the evolution of the NCI Fund, a flagship intervention established under section 104 of the Nigerian Oil and Gas Industry Content Development (NOGICD) Act, to bridge financing gaps confronting indigenous oil industry firms.
While the five NCI Fund products managed by the BOI and two products managed by Nigerian Export-Import Bank (NEXIM) have provided debt financing to qualified service companies over the past decade, with loans lasting five years and interest rates of eight per cent, the Equity Fund has carved a new niche.
In his remarks, the Executive Secretary charged the investment committee to carry out rigorous due diligence on every company seeking support and ensure that the objectives for which the Fund was established are fully achieved.
According to him, the Equity Fund must never be mistaken for a grant. He stressed that beneficiaries are expected to deploy the capital judiciously and repay in accordance with the terms of the investment.
Source: arise.tv