By Babajide Komolafe
In apparent bid to to diversify risk and enhance better yield Afrinvest has restructured the Nigeria International Debt Fund (NIDF) making it open end and expanding its investment base to include locally issued FGN and State Governments Bonds.
Established in 1997 by Afrinvest, NIDF a distinct investment product was created as a closed-end fund to provide sophisticated investors opportunity to invest in the thriving international bond market by investing in dollar denominated debt obligations of the Federal Government of Nigeria.
The feature of the fund at inception had one million authorised notes with a 24 year life term while 75 per cent of its net investment income was paid to investors.
Speaking on the new features of the Fund at a pre launch press briefing in Lagos, Managing Director/chief Executive, Afrinvest, Mr. Ike Chioke said, â€œAfrinvest has obtained the approval of Securities and Exchange Commission to effect some vital changes to the Fund to make it more attractive to the investing public.â€
â€œThese changes which have been effected include: Conversion from a closed-end fund to an open-ended fund to enhance liquidity of the Notes; Expansion of the Fundâ€™s investment universe to include locally issued FGN and State Governments Bonds in order to diversify risk and enhance better yield.
Conversion from dollar denomination to naira denomination in order to reduce the currency conversion risk and also provide investors with the flexibility to subscribe and receive payout in Naira. Change payout ratio from 75% to 50% in order to retain and reinvest a greater portion of the Fundâ€™s income for capital appreciation.
Reduced the par value of the Notes from US$100 to US$10 to make the Fund more accessible to a wider range of discerning individual and institutional investors. Conversion from Primary Listing of the NIDF Pic on the floor of NSE to Memorandum Listing of the Fund to remove illiquidity and price disparity.â€
He said the target markets for the Fund are institutional investors and discerning investors. Institutional investors include PFAs, insurance companies, banks, associations and clubs.
As an investment platform, the NIDF is of particular benefit to PFAs owing to its unique features informed the National Pension Commissionâ€™s (PENCOM) attestation in unequivocal terms that the NIDF qualifies as an investible instrument for PFA assets.
The specific features that make the NIDF particularly suited for PFAs include: The Fund has been in existence for 12 years; The Fund has made coupon