Shaire: Private Capital Now Key Driver for Infrastructure Development

The Co-Chief Executive Officer of  AVA Capital Group, and  investment banking services group, Mr. Efe Shaire,  spoke on  the impact of government’s policies on the economy,  the group’s efforts to play significant role in infrastructure funding among others. Goddy Egene brings the excerpts:

What is your assessment of the impact of recent government policies and economic reforms on Nigeria’s investment climate, and how is AVA Capital Group modifying its strategies in light of these changes?
Investors now face the challenge of protecting their portfolio’s real value against these tough macro-economic realities. At AVA Capital Group, we’ve expanded our offerings to meet these challenges. Our Dollar fund, for instance, was 2023’s second-best performer, providing a natural hedge and yielding returns above conventional products. Our value-adding management strategies contributed immensely to this return generation for our investors. We’re also investing in infrastructure, launching a N 200 billion programme to finance Nigeria’s infrastructural needs and offer attractive yields in private credit. AVA Capital Group recognises the vital role of infrastructure investment in Nigeria’s development. We also align with the shifting global landscape where private capital is evolving to be a key driver for infrastructure investing. Our infrastructure fund addresses the currency mismatch in capital projects for businesses through Naira-denominated financing. This strategy streamlines capital allocation and reduces currency risks. Additionally, we’ve innovated in the fixed-income space with a product offering floating returns plus a three per cent and five per cent margin, indexed to comparable 10-year FGN bonds. This approach aligns investment returns with economic conditions, offering protection against rising market rates.

Given your mission to ensure long-term financial success for clients, how does AVA Capital Group differentiate its strategies from conventional investment approaches in the Nigerian market?
At AVA Capital Group, we distinguish ourselves in the Nigerian capital market by aligning investment strategies with client needs and evolving market realities. We take a largely data-driven approach to our respective businesses with a deliberate focus on best execution and superior service delivery.

Can you elaborate on the types of innovative financial products AVA Capital Group offers that contribute to building a solid foundation for clients’ financial futures?
AVA Capital Group   is made up of four distinct Securities and Exchange Commission (SEC) licensed businesses. The group offers investment banking services through AVA Capital Partners, including mergers and acquisitions, capital raising, underwriting, and advisory services to help clients achieve their objectives in the most efficient and professional manner. Our wealth management services through AVA Global Asset Managers Limited encompass portfolio management, estate planning, family office, and investments for corporates and high-net-worth individuals, aiming to help clients create, grow and protect their wealth and legacy.AVA Securities Limited, a broker/dealer, facilitates the trading of fixed income securities and equities for our clients. We are able to offer best in class execution for clients on all registered trading platforms in Nigeria. The group provides trusteeship services via AVA Trustees Limited, overseeing assets and managing public and private trusts, estates, and financial structures, ensuring proper administration, protection, legal adherence, and fulfillment of fiduciary purposes.

In the context of long-term wealth creation, how does AVA Capital Group address the challenges of economic volatility and inflation specific to the Nigerian economy?
Creating lasting wealth is a function of balancing risks and compounded returns. We encourage all our clients to take a long term view of the markets. However, to mitigate short term challenges, robust strategies like diversification and targeted asset allocation are implemented, spreading investments across different asset classes to align portfolios with clients’ risk tolerance and financial objectives.

What role does personalized financial planning and portfolio management play in ensuring long-term success for your diverse clientele?
AVA Capital Group prioritizes financial planning and portfolio management for its diverse clientele. By understanding individual goals, risk tolerance, time horizon, and objectives, we tailor strategies to meet each client’s specific needs. This meticulous approach to asset allocation ensures well-diversified portfolios.
We implement risk management strategies based on individual clients’ risk tolerance, aiming to mitigate downsides and optimize returns. Regular reviews ensure portfolio alignment with client goals and adapt to market and personal circumstances, especially in Nigeria.

AVA Capital Group has achieved impressive growth with over N195 billion in raised capital. What key strategies have fuelled this success, and how do you plan to sustain this momentum in the future?
AVA Capital Partners, which Is the Investment Banking arm of AVA Capital Group has successfully raised over N200 billion in capital in the past few years. This feat has simply been as a result of the expertise, hard work and experience of our team. So, I would say that having the right people has been one of the major drivers of the success we have had so far. Similarly, maintaining such feat requires commitment, discipline and focus, all of which forms part of our intrinsic values at AVA Capital Group.

 With over 1,300 satisfied clients, what are the core values and client-centric practices that have fostered such strong trust and loyalty towards AVA Capital Group?
Our success as an organisation and as individuals is driven by our commitment to excellence and these core values: Performance: We focus on the details. With innovation and creativity,  every step we take is intentional. We strive to outperform our competition fairly and deliver the best returns to our clients. Execution: We believe in the relentless pursuit of excellence in execution- we work with passion, utilising innovation, moving with speed and dexterity because time is our most valuable resource. Adaptability: We are forward-thinking. We proactively seek out ways to do things more efficiently and focus on maintaining our effectiveness in these rapidly evolving times. Character: We hold ourselves to the highest ethical standards. Our over arching philosophy at Prosperis is built around the six  pillars of character; Trustworthiness, Respect, Responsibility, Fairness, Caring and Citizenship. Enterprise: We are initiators. We are in constant pursuit of solutions to life’s daily problems. Our collective focus is on providing sustainable value to our clients and the communities we serve.

Given your ambition to disrupt the traditional financial landscape in Sub-Saharan Africa, how is AVA Capital Group leveraging technology to provide efficient and accessible financial services?
In today’s business environment, automation is essential for swift service delivery.
Embracing innovative solutions in the rapidly advancing technological era, we are transforming traditional financial services to promote financial inclusion. Strategic technology integration allows us to efficiently serve a wider range of clients. Utilising Enterprise Resource Planning software, we have automated our operations, ensuring prompt and efficient service delivery, leading to peak client satisfaction. Artificial Intelligence (AI)  has become a topical area and we’re exploring ways we can leverage this optimally.

In your expert opinion, what are the most promising sectors for investment opportunities within the current Nigerian economy, considering both risks and potential rewards?
Nigeria’s economy is dynamic, influenced by government policies, global economic conditions, and domestic challenges. Some sectors show promise, while considering risks. Nigeria’s growing population and a growing tech-savvy population present  opportunities for investment in agribusiness, technology, and telecommunications. Investing in agriculture, technology, and telecommunications can tap into the country’s vast agricultural potential and digital economy.
The healthcare sector in Nigeria presents potential for growth in pharmaceuticals, healthcare services, and medical technology. The  power and renewable energy sector offers investment opportunities. The real estate sector, driven by urbanization and population expansion, offers growth potential in residential, commercial, and industrial areas. Nigeria’s financial services sector, including banking and insurance, offers opportunities for both traditional and digital services. Challenges include inadequate infrastructure, fluctuating commodity prices, regulatory uncertainties, cybersecurity concerns, competition, economic downturns, consumer behaviour shifts, and supply chain disruptions.

What role do you see ethical and sustainable investment practices playing in the future of Nigeria’s financial sector, and how is AVA Capital Group contributing to this movement?
Ethical and sustainable investment practices are integral to shaping Nigeria’s financial future amid growing global awareness of ESG issues. Recognizing this, regulatory amendments by bodies like the Securities and Exchange Commission (SEC) underscore the commitment to enforce such practices, fostering a competitive and inclusive financial landscape. These efforts are expected to drive innovation, leading to the emergence of green financial products and sustainable bonds. AVA Capital Group’s dedication to sustainability is evident in the recently approved AVA Infrastructure Fund. This fund seeks to address Nigeria’s infrastructural deficits, contribute to socio-economic impact and align with the broader movement towards ethical and sustainable investment practices.

Beyond Financial services, how does AVA Capital Group contribute to the development and well-being of the communities it operates in, aligning with itscommitment to nation-building?
AVA Capital Group channels its Corporate Social Responsibility (CSR) through the Prosperis  Empowerment Foundation. This initiative aims to combat poverty by supporting petty traders and enabling them scale their businesses in size and scope. The foundation provides accessible uncollateralized loans, financial education, interest free and subsidised interest rate loans to empower petty traders in their respective markets.

Can you tell us more about the AVA Infrastructure Fund?
The AVA Infrastructure Fund (AVA IF)  is a closed-end fund  registered  with SEC. The Fund seeks to address the infrastructural deficits in Nigeria through the objective provision of institutional capital into infrastructure development. The overall objective of the AVA IF is to spur socio-economic impact and unlock the development of the Nigerian economy.
The purpose of the Fund is to serve as a new source of capital for infrastructure projects, promoting financing for infrastructure projects in Nigeria and the resulting socio-economic effects. The Fund is supported majorly by private sector monies and offers a sustainable platform for new kinds of investors that traditionally do not have access to these markets to invest billions in infrastructure projects. The Series 1 of the AVA Infrastructure Fund (AVA IF) issuance of up to N20 billion by AVA Global Asset Managers Limited under the approved N200 billion Programme opened 29th   of January, 2024.

What was the thought behind launching an Infrastructure Fund and what infrastructure projects could be considered for AVA IF funding?
According to PwC’s Nigeria Economic Outlook 2024 report recently released, there is uncertainty regarding a significant financial commitment from the government for the enhancement of its predominantly inadequate infrastructure. The report highlights that the government is anticipated to face challenges in maintaining the existing infrastructure, relying heavily on alternative funding sources rather than financing projects directly. PwC expressed concern in its report, stating, “Infrastructure funding is likely to remain insufficient in 2024.”

Additionally, it pointed out that the allocated infrastructure spending budget for the year is N1.32 trillion, falling short of the World Bank’s recommended 70 per cent infrastructure-to-GDP benchmark, which currently stands at 30 per cent. Talking about the infrastructure projects  that could be considered for AVA IF funding, such  projects must be in the key focus industries of the Fund which are the power, gas distribution, processing and storage, transport, urban & social infrastructure, utilities, agribusiness and supporting infrastructure, and telecommunications. Eligible projects will be assessed and prioritised according to the assessment criteria established by the investment committee. These reviews will also include assessment of strategic fit against the Fund’s infrastructure timing and priorities, return, economic benefit, and job creation. This is so investment can be prioritised for projects that deliver the greatest benefit to the Fund.