We are pleased to introduce this inaugural edition of PEVCA Nigeria's 2024 Mid-Year Review and Outlook, a publication that delves into the key trends, challenges, and opportunities shaping Nigeria's private equity and venture capital landscape. It brings together expert insights from leading fund managers, general counsel, legal, financial, tax, and other professional advisers, and industry stakeholders, offering a thorough analysis of the most critical developments and strategic issues specific to the Nigerian market, that are impacting the Nigerian market today.
The collection of articles, interviews, and thought leadership pieces examine the impact of recent economic reforms, regulatory updates, and emerging market dynamics with the objective of equipping Nigeria-focused investors, fund managers, and stakeholders with the insights and strategies necessary to navigate this rapidly evolving market, thereby driving sustainable growth and success in the Nigerian market.
The past year has been characterised by significant regulatory and fiscal reforms, economic transitions, and shifting market dynamics. These changes have opened new opportunities and presented challenges for Nigerian private equity and venture capital stakeholders.
On the regulatory front, the Securities and Exchange Commission (SEC) has released exposure drafts proposing amendments to the rules governing private equity and venture capital funds. These proposed changes include extending the submission timeframe for offer documents, removing the 28-day offer period for infrastructure funds, expanding the definition of private equity funds, and introducing new definitions and requirements for venture capital funds. While these updates are a step forward, some ambiguities remain, for instance, concerning investments in early-stage companies.
The threshold for private equity fund registration is proposed to be raised to NGN5 billion. While this is a positive step in principle, current economic conditions and exchange rate fluctuations may require further adjustments to ensure the threshold aligns with market realities. In addition, certain proposed restrictions on fees, including minimum requirements on management and performance fees, may have unintended restrictive effects on the industry.
Economic reforms, such as the floating of the Naira, the removal of petroleum subsidies, and the introduction of tax incentives aimed at stimulating both foreign and domestic investments, are also shaping the investment landscape. Our contributors provide in-depth analyses of these reforms, exploring their impact on private equity transactions, particularly in light of recent changes to capital gains tax, withholding tax, and the implications of the Nigerian Finance Act.
While these reforms have led to short-term challenges, such as inflation, they are paving the way for a more robust investment environment. This is evident in sectors like renewable energy and technology, where environmental, social, and governance (ESG) criteria and climate change considerations are becoming increasingly central to investment strategies. Nigerian companies are aligning their operations to attract impact investors, particularly in sectors where these considerations are gaining traction.
Sector-specific opportunities continue to emerge, especially in technology, healthcare, and agribusiness sectors. Our fund manager perspectives highlight these key industries and the regulatory developments that are shaping their growth potential. The technology sector, for example, has outpaced oil in contributing to Nigeria's GDP, underscoring its high growth potential and attractiveness to private equity and venture capital investors.
The ongoing banking recapitalisation efforts present unique opportunities for private equity and venture capital firms to engage further in Nigeria's financial sector, despite the current macroeconomic challenges and regulatory complexities. This publication also benefits from expert insights on fundraising trends in the evolving landscape for private equity and venture capital in Nigeria. It explores the cautious optimism surrounding projected GDP growth, assesses the potential positive effects of recent foreign exchange market reforms and Central Bank of Nigeria policy updates, and discuss the complexities of cross-border transactions and the strategic considerations necessary for successful deal-making in Nigeria.
The concluding outlook offers critical perspectives on the broader political and security environment in Nigeria, highlighting the risks and opportunities that arise from the current socio-political climate. We propose tools for assessing and managing risks effectively in this dynamic market.
In our CEO Spotlight interview, Oguche Agudah,
CEO of PENOP, reflects on 20 years of pension reforms, PENOP
Milestones and objectives, and explores how pension funds might
play a more significant role in private equity and venture capital
investments, potentially fuelling further growth in the sector. We
also present insightful interviews with Mojisola Fashola,
Managing Director and General Counsel of Kuramo Capital (New York),
and Dipo Okuribido of Verod Capital, who share their
respective perspectives on the practical implications of regulatory
changes and how they are adapting to the evolving landscape to
provide strategic advice on mitigating risks and leveraging
opportunities to the teams they support.
All of the contributions emphasise the importance of understanding
the nuances of the Nigerian market and developing market-specific
risk management strategies.
On behalf of the PEVCA Legal & Regulatory Committee, we extend our gratitude to Oguche Aguda, Moji Fashola, and Dipo Okuribido, and to Aelex, Argentil Capital Management, Control Risks, Deloitte, Detail Solicitors, Duale, Ovia and Alex-Adedipe, Ernst & Young, G. Elias & Co., Olaniwun Ajayi LP, PricewaterhouseCoopers, and Udo Udoma & Belo-Osagie, for their invaluable contributions to this maiden edition of the PEVCA Mid-Year Review and Strategic Outlook for 2024.
Our aim is to provide valuable guidance to our members and sector stakeholders as they navigate regulatory challenges and optimise their portfolios in the current economic climate. As the industry continues to evolve, PEVCA's Legal and Regulatory Committee remains committed to supporting PEVCA, its members, and the private equity and venture capital sectors in Nigeria, through advocacy, capacity building, and fostering collaboration across the industry to create sustainable value for all stakeholders.
'Folake Elias-Adebowale and 'Dipo Okuribido
For: THE PEVCA NIGERIA LEGAL AND REGULATORY COMMITTEE
Originally published by PEVCA.
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