Investment Management

“When Phil Southwell and I conceptualised our investment management strategy, we shared a compelling belief that we could in our own small way change the course of Nigeria and Sub-Saharan Africa’s economic development and sustainable prosperity. We felt this was achievable, if we succeeded in attracting capital to invest in, and support high growth businesses and opportunities that are accretive to Nigeria and Africa’s economic and sustainable development.

Chapel Hill Denham Management is an impact investment firm investing in Infrastructure (including Renewables), Real Estate (including Student & Affordable Housing), SMEs (Women & Youth-Owned SMEs), Digital & Financial Inclusion, Healthcare & Education, as well as Strategic Opportunities (across Consumer, Financials (including Fintech) and Industrials).”

Bolaji Balogun, Chief Executive Officer

Chapel Hill Denham offers a variety of investment, planning and wealth management advisory solutions to a broad client base of institutions, family offices, charities, foundations, HNW and other individuals. The firm offers traditional as well as alternative products and services in both domestic and foreign currency, including mutual funds and alternative funds. We also manage private and listed funds.

Our areas of expertise include Nigeria, Credit, Infrastructure, Energy and Renewables, Real Estate, SME, Financial Inclusion, Healthcare and Education. Our approach is client-centric as we believe in long term and value adding relationships. Our strength lies in our capabilities, extensive local knowledge, robust investment processes and risk management expertise to enable our clients to reach their financial goals.

InvestNaija

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Chapel Hill Denham - Infrastructure

Infrastructure

The Chapel Hill Denham Nigeria Infrastructure Debt Fund (“NIDF” or “the Fund”) is the first listed infrastructure debt fund in Nigeria and Sub-Saharan Africa. NIDF is a close-ended fund, domiciled in Nigeria and denominated in Naira. The Fund is structured to enable investor’s access infrastructure asset class, while providing benefits of predictable returns available from long-dated infrastructure debt investments.

The investment focus of NIDF is on the traditional infrastructure sectors, primarily transport, power, renewable energy, utilities, energy infrastructure (e.g. storage terminals), logistics and other public-private-partnership type investments. To be financially viable, these projects require long-dated senior debt, which is increasingly not available from commercial banks.

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By creating permanent capital, NIDF will be able to support these projects with long-term financing, in the process generating superior, risk adjusted returns for its investors, almost entirely in the form of running yield.

NIDF will invest in cash yielding loans, that:

  • Have predictable cash flows derived from long-term offtake agreements and/or concessions and/or monopolistic assets
  • Enjoy first priority in cashflow waterfall and senior lien on the project assets
  • Generate primarily floating rate returns and capture return premium available from being a scare source of long-term funding
  • Emphasise principal preservation

Rationale

Mobilisation of domestic currency sources for funding on infrastructure is critical for the Nigerian economy, in order to meaningfully bridge the existing infrastructure deficit. NIDF will help direct institutional investments into productive infrastructure assets, which are expected to have a large, positive development impact, through the multiplier effect on investments, economic growth and well-being of population.

Typically, the need of debt financing for an infrastructure project is substantially larger than equity. Historically, senior debt financing for infrastructure projects in Nigeria has been provided by commercial banks, financial institutions, export credit agencies and multilateral/bilateral investment agencies, with a large portion, with relatively short tenors. Considering that the underlying assets have a useful life of as long as 25-30 years, the existing loan tenors are not adequate and therefore cause a mismatch between the time horizon of the loan capital and projects. The availability of debt financing for infrastructure projects has been further constrained with the changes in liquidity conditions faced by banks and the introduction of Basel-III regulatory norms.

This scenario is seen as an opportunity for the Fund to provide long-term local currency financing for infrastructure projects, which is generally not available for other sources.

Structure & Governance

The Fund is regulated under the Investment & Securities Act 2007 and the rules for Collective Investment Schemes and Infrastructure Funds issued by the Securities & Exchange Commission. The fund manager, Chapel Hill Denham Management Limited, has been assigned an “A(IM)” rating by Agusto & Co.

The NIDF has a robust governance structure, providing the necessary expertise and oversight for Fund’s operations:

Investment Committee

The Fund Manager has established an Investment Committee comprising of senior and experienced investment professionals, including an independent member with wide-ranging experience in infrastructure investments. The five members of the Investment Committee collectively have more than 100 years, infrastructure investing and financing experience.

Advisory Board

Will comprise a representatives of the Trustee and other members nominated by the Fund’s institutional investors.

Trustee

The ownership of all the Fund’s assets shall be vested in the Trustee.

Custodian

Shall take possession of and maintain safe custody of all investment instruments of the Fund

Valuation Adviser

Will undertake an independent valuation of the Fund’s investments on a semi-annual basis.

Investor Updates

The Team

Real Estate

The Chapel Hill Denham Nigeria Real Estate Investment Trust (“NREIT” or the “Fund”) is a Shariah-compliant, closed-ended fund domiciled in Nigeria, denominated in Naira and listed on the NSE, focusing on income producing commercial real estate (office, retail, industrial) assets in Nigeria.

NREIT is a differentiated Nigerian REIT through its sector and asset focus, governance, and strategy to deliver scale, diversification and liquidity, in-line with global best practice.

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This strategy focuses on:

  • Existing Shariah-compliant income producing buildings
  • A-grade commercial real estate assets with higher credit quality corporate tenants
  • Quarterly distributions of over 90% of net income
  • Income and capital growth through inflation-linked contractual lease escalations
  • Performing multiple capital raises in the same vehicle to create scale and diversification over time
  • Strong and transparent governance – independent trustee, custodian and valuers

Through delivering its strategy, NREIT is targeting a Naira return of over 20%, driven by regular annual income, income growth, and capital growth.

Rationale

Real estate in Nigeria is significantly more illiquid than in G20 countries.  Nigerian corporates and entities typically have a substantial amount of capital invested in real estate assets, effectively leaving this capital trapped on their balance sheets. This capital could be redeployed more efficiently in their core businesses, catalysing economic growth. There is also limited liquidity for owners of real estate assets because there are very few opportunities for institutional and retail investors to access real estate.

REITs have historically been an unrepresented asset class in Nigeria with limited scale, diversification and liquidity. They have also had governance challenges. However, they represent a significant investment opportunity in Nigeria; a 15% allocation by Nigeria’s pension funds alone to REITs, to be in-line with average international allocations, would result in over N1 trillion of capital being allocated to the asset class.

Moreover, NREIT has identified an initial investment universe of over N1 trillion of investment grade assets (which continues to grow), and has a N100 billion fundraising programme approved by the Securities and Exchange Commission in Nigeria.

Structure & Governance

The Fund is regulated under the Investment & Securities Act 2007 and the rules for Collective Investment Schemes and REITs issued by the Securities & Exchange Commission. The fund manager, Chapel Hill Denham Management Limited, has been assigned an “A(IM)” rating by Agusto & Co.

The NREIT has a robust governance structure, providing the necessary expertise and oversight for the Fund’s operations:

Investment Committee

The Fund Manager has established an Investment Committee comprising senior and experienced investment professionals, including an independent member with wide-ranging experience in real estate investments. The four members of the Investment Committee collectively have more than 100 years of investing and financing experience.

Advisory Board

Will comprise a representative of the Trustee and other members nominated by the Fund’s institutional investors.

Trustee

The ownership of all the Fund’s assets shall be vested in the Trustee.

Custodian

Shall take possession of and maintain safe custody of all investment instruments of the Fund

Valuation Adviser

Will undertake an independent valuation of the Fund’s investments on a semi-annual basis.

The Team

The Funding Space brings together stakeholders, SMEs, investors, advisors etc. in Nigeria’s SME ecosystem.

Mutual Funds

Chapel Hill Denham - Money Market Fund

Chapel Hill Denham Money Market Fund

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Chapel Hill Denham - Paramount Equity Fund

Chapel Hill Denham Paramount Equity Fund

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Chapel Hill Denham - Women's Investment Fund

Chapel Hill Denham Women’s Investment Fund

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Chapel Hill Denham - Desktop Logo

Daily Mutual Fund Prices
27 April 2020

 

Fund Name Offer Price N Bid Price N Net Return / Yield
Women’s Investment Fund 104.17 203.50
Paramount Equity Fund 10.06 9.86
Chapel Hill Denham Money Market Fund 100.00 100.00 5.11%
Nigeria Infrastructure Debt Fund NAV Per Unit N108.26