Nigeria Sovereign Investment Authority, Abuja, recorded strong performance in 2020 despite the COVID-19 pandemic, with assets up 33.3%.
The NSIA oversees three individual sovereign wealth funds: the Future Generations Fund, the Nigeria Infrastructure Fund and the Stabilization Fund.
Total assets in the three funds grew 33.3% to 772.8 billion Nigerian naira ($2 billion), while total comprehensive income was 160.1 billion naira, up from 36.2 billion naira in 2019, an update said. The asset allocation strategy for NSIA is 50% in the Nigeria Infrastructure Fund, 30% in the Future Generations Fund and 20% in the Stabilization Fund, a spokesman said.
The growth was achieved despite a $150 million withdrawal from the Stabilization Fund by the Federal Government of Nigeria. The fund performed well, despite low interest rates, the update said. Details on performance were not disclosed.
The Stabilization Fund is invested in fixed-income assets, mainly short-term bonds, the update said. As of Dec. 31, 21% of the fund was invested in a portfolio of hedging assets, mainly U.S. Treasuries tracking the Bloomberg Barclays 1-3 Year U.S. Treasury Bond index. The remainder of the portfolio is composed of growth assets, invested in short-duration U.S. corporate credit, asset-backed securities and other fixed-income securities. NSIA executives also maintained some exposure to derivatives for downside protection.
In 2020, the Future Generations Fund significantly changed its asset allocation, completely changed and expanded its hedge fund manager roster, made commitments to venture capital managers, and made co-investments in equities alongside venture capital and private equity managers, the update said.
Venture capital allocations gained 29% in dollar-terms, hedge funds were up 11%, emerging market long-only equity managers gained 22%, developed market long-only equity managers returned 19% and the fund's private equity allocation gained 13% for the year. Individual allocations were not available.
Only the fund's "other diversifiers" allocation — including health-care royalties, commodities and real estate, made negative returns. The update did not provide figures. "NSIA expects these funds will recover eventually, having had a solid performance in the past years," the update said.
Executives added Sachem Head Capital Management to their manager roster and committed to a number of funds in 2020, including Greenspring Opportunities VI, run by Greenspring Associates; Lombard Odier Investment Managers' Secondary Fund III and Helios Investment Partners' Helios Private Equity Fund IV. Allocations were not available.
The Nigeria Infrastructure Fund's projects were "adversely impacted" by the COVID-19 pandemic, with significant disruptions to supply chains and logistics.
Over the year, the fund focused on agriculture, health care, highways, power, gas industrialization and financial markets infrastructure, the update said.
"The 2020 fiscal year was characterized by high volatility and global market uncertainty on account of COVID-19 in the first half," Uche Orji, CEO of NSIA, said in the update.
"However, the Authority strategic investments generated respectable returns despite the impact of COVID-19. Notably, NSIA has invested in various private equity and venture capital investment funds to tap into the high-growth sectors," he said.
For this year, NSIA executives think it unlikely that the market will repeat its 2020 performance, which it said was driven by technology stocks. Further allocations to venture capital, global equities and European equities are expected for the Future Generations Fund, with an expectation that the reopening of markets will lift stocks.
The Nigeria Infrastructure Fund will be active in opportunities related to data centers, data networking, software, pharmaceutical manufacturing and other investments through its Innovation subfund.
