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Sovereign Wealth Fund yields N1.2bn profit in Q1

By BusinessNews Staff on June 24, 2014

The Nigeria Sovereign Investment Authority has announced a profit of N1.2bn from its investment of the Sovereign Wealth Fund for the first quarter of this year, up from the N525m made in the 15-month period ended December 31, 2013.

In what may be considered a justification of the decision of the Federal Government to set up the SWF to save some portion of the money realised from the sale of crude oil, the NSIA also expressed optimism that it would match if not surpass the first quarter profit margin when the result of the second quarter audit was ready.

The Managing Director/Chief Executive Officer, NSIA, Mr. Uche Orji, explained that the N1.2bn was made from the investment of just 50 per cent of the $400m Future Generations Fund, which only commenced in the fourth quarter of last year.

The SWF is divided into three broad areas namely: the Stabilisation Fund, Future Generations Fund and Infrastructure Fund. It has a seed fund of $1bn with the Federal Government recently allocating another $200m to it specifically for investment in gas to power projects.

Orji said, “We are encouraged that the financial performance as of Q1 2014 improved within the bounds of our expectations with an audited net profit for the period standing at a robust N1.2bn.

“While it is humanly impossible to correctly predict the future, I am nonetheless confident that the NSIA is on the path to deliver a more robust performance by the end of 2014, ceteris paribus. We are on track to deliver similar or higher numbers as seen in Q1 in the second quarter. We will be in a better position to give you the specifics at the end of July.”

On the $200m Stabilisation Fund, Orji said the portfolio had made a modest positive return of 0.55 per cent through to the end of April, because it was not structured to provide significant returns due to the requirement of daily liquidity, the low interest environment and conservative nature of the mandates.

He, however, gave an indication that the management of the fund by external consultants would be reviewed at the end of the month in preparation for the anticipated rising interest rates in the countries where it was invested.

“As such, we have reallocated the growth portion of this portfolio to managers with the expertise and latitude to navigate such contrasting environments. The reallocation to these managers is ongoing and shall be completed in the next two weeks,” the NSIA boss added.

On the Nigeria Infrastructure Fund, which is being managed directly by the NSIA, Orji said it had been designed to focus on agriculture, health care, real estate, motorways and power, adding that its investment in the construction of the Second Niger Bridge, adding that work was going on steadily on the project.

[Punch]

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