NCDMB, BOI launch $100m equity fund, offer up to $5m per indigenous oil firm

In a move aimed at providing a new financing solution for Nigeria’s oil and gas service sector and accelerating local content development, the Nigerian Content Development and Monitoring Board (NCDMB) and the Bank of Industry (BOI) on Friday inaugurated the Investment Committee of the Nigerian Content Equity Fund (NCEF), a groundbreaking $100 million financing initiative designed to provide long-term capital to indigenous service companies through equity investments rather than traditional debt.

The General Manager, Corporate Communications, NCDMB, Dr. Obinna Ezeobi, disclosed this in a statement issued over the weekend.

The committee was inaugurated in Lagos by the Executive Secretary of NCDMB, Engr. Felix Omatsola Ogbe, marking the rollout of the pioneering financing window under the Nigerian Content Intervention (NCI) Fund.

According to the Fund’s product paper, the Nigerian Content Equity Fund seeks to reduce the unit cost of locally produced oil and gas products and services, create an additional income stream for the NCDMB, and attract other investors and lenders to financially viable indigenous companies.

“By providing access to equity financing, the NCEF will enable service companies to expand their operations and increase market share, thereby contributing to the growth of Nigeria’s oil and gas industry,” the document stated.

The Fund has a capital base of $100 million, with a maximum investment (obligor limit) of $5 million per beneficiary company. While the NCDMB provides the funding, the Bank of Industry serves as the Fund Manager.

Target beneficiaries include oilfield service companies, manufacturers serving the oil and gas industry, fabrication yards and other linked sectors. The initiative is expected to stimulate economic growth, create jobs and generate wealth, with projections indicating about 12,500 direct jobs and 7,000 indirect jobs.

The inauguration of the Investment Committee marks another milestone in the evolution of the NCI Fund, a flagship intervention established under Section 104 of the Nigerian Oil and Gas Industry Content Development (NOGICD) Act to bridge financing gaps facing indigenous oil and gas companies.

While the five NCI Fund products managed by BOI and two managed by the Nigerian Export-Import Bank (NEXIM) have provided debt financing to qualified service companies over the past decade through five-year loans at an interest rate of eight per cent, the Equity Fund introduces a new financing model focused on equity participation.

Speaking at the inauguration, Ogbe charged members of the Investment Committee to carry out rigorous due diligence on all prospective beneficiaries and ensure that the objectives of the Fund are fully achieved.

He stressed that the Equity Fund should not be misconstrued as a grant, noting that beneficiaries are expected to deploy the capital responsibly and meet the agreed investment terms.

“Our top priority should be identifying companies that will utilise the Fund properly and, most importantly, ensure that the investment is returned so that the programme can continue for other deserving beneficiaries,” he said.

Also speaking, the Managing Director of the Bank of Industry, Dr. Olasupo Olusi, described the inauguration as a major milestone in the implementation of the NCI Fund Equity Fund, saying it represents the next phase of the long-standing partnership between BOI and the NCDMB.

According to him, the collaboration, which spans nearly a decade, began with the administration of the $350 million Nigerian Content Intervention Fund, through which hundreds of indigenous oil and gas companies have accessed financing to expand their operations.

Olusi said the introduction of an equity financing window addresses a critical gap in the industry’s financing architecture.

“The next step, which I am very impressed with and thankful to the NCDMB for pursuing with BOI, is the need to bridge the financing gap with equity,” he said.

He explained that equity financing provides a different class of financial instrument capable of supporting businesses that may not yet qualify for conventional debt facilities.

“We believe this Fund will catalyse additional investment into Nigeria’s oil and gas sector and move the industry forward,” Olusi added, expressing confidence that members of the Investment Committee would discharge their responsibilities with integrity and professionalism.

Providing further insight into the initiative, the Group Head, Equity Investments at BOI, Mr. Chike Chukwuelu, said the Equity Fund addresses what industry experts describe as the “missing middle” in business financing.

He noted that many indigenous companies possess viable business models and strong growth prospects but struggle to access senior debt because they lack the collateral required by commercial lenders.

According to Chukwuelu, the equity structure will also enable fund managers to exercise closer oversight of beneficiary companies, helping them strengthen corporate governance, improve operational performance and build sustainable businesses.

“What this also does is give us greater oversight of these companies because of the financing instrument we are using, enabling us to help them develop into sustainable businesses, which is the core objective of the Fund,” he said.

The Senior Technical Adviser to the Executive Secretary, Engr. Austin Uzoka, said the Equity Fund provides an opportunity to achieve outcomes that previous financing interventions were unable to deliver fully.

“The striking thing is that this Fund is designed to accomplish what the other funds have not been able to achieve,” he said.

Uzoka added that the Investment Committee will provide strategic oversight for the Fund, ensure prudent investment decisions and build a portfolio of indigenous companies capable of growing into major players in Nigeria’s oil and gas industry.