Presentation to Securities & Exchange Commission (SEC) September 2013 Confidential
Agenda 1. Introduction: NSIA Vision & Mission 2. Global Context of Benefits of SWFs 3. Management Update on Operations to Date 4. Funds Update 5. Q & A 2
The NSIA Vision Statement & Mission The vision of the NSIA comes in two parts: – (1) To establish NSIA as world-class sovereign wealth fund manager – (2) To become the premier infrastructure investor/ co-investor partner of choice for all commercially viable projects of size in Nigeria Mission of the NSIA – Build a savings base for future generations of Nigerians – Enhance the development of Nigerian infrastructure – Promote fiscal stability for the country in times of economic stress The NSIA’s operating model will be a hybrid of outsourced external- fund managers and in-house managers 3
Attributes of World Class SWF Compliance with Santiago Principles – 24 key principles including transparency of investment processes and independence of decision making Financially self sustaining enterprises – The NSIA will be a public sector enterprise with a private sector philosophy – Our expenses will be paid from returns we generate Vehicle for attracting foreign investment – Presence of co-investment partners is a key component of our infrastructure investment process – so far we have received positive feedback from potential partners, including other SWFs and private equity firms Stabilization effect in times of economic stress – SWF’s are tools of fiscal responsibility and major countries with sizeable SWFs have shown these benefits Disciplined contribution to the fund is a tool that lowers cost of capital – Rating agencies such as S&P have mentioned that the NSIA important for our country rating, which affects our cost of capital 4
SWFs are growing the world over More new funds created in the last 10 years than in the previous 40 years *For the US and Canada, this includes State & Province pension funds. ** Only Iraq and Ecuador are only OPEC member nations without an SWF 5
SWFs, ranked by total assets AUM (US$ AUM Rank Name billions) Rank Name (US$ billions) 1 Government Pension Fund Global (Norges Bank), Norway $665.30 24 Samruk-Kazyna, Kazakhstan $32.10 2 Abu Dhabi Investment Authority, United Arab Emirates $627.00 25 National Development Fund, Iran $30.00 3 State Administration of Foreign Exchange, China $589.50 26 State Oil Fund of the Republic of Azerbaijan, Azerbaijan $29.80 4 China Investment Corp., China $482.20 27 Strategic Investment Fund, France $25.50 5 Hong Kong Monetary Authority, Hong Kong $328.80 28 National Pensions Reserve Fund, Ireland $18.20 6 Kuwait Investment Authority, Kuwait $296.00 29 Taiwan National Stabilisation Fund, Taiwan $17.20 7 Temasek Holdings, Singapore $247.70 30 New Zealand Superannuation Fund, New Zealand $16.80 8 Government of Singapore Investment Corp., Singapore $247.50 31 National Development Fund, Venezuela $15.00 9 National Social Security Fund - China, China $150.50 32 Bahrain Mumtalakat Holding Co., Bahrain $13.40 10 Dubai World, United Arab Emirates $100.00 33 Economic and Social Stabilization Fund, Chile $13.20 11 Qatar Investment Authority, Qatar $100.00 34 Dubai International Capital, United Arab Emirates $10.00 12 National Wealth Fund, Russia $88.30 35 Abu Dhabi Investment Council, United Arab Emirates $10.00 13 Future Fund, Australia $83.90 36 Timor-Leste Petroleum Fund, Timor-Leste $9.70 14 Revenue Regulation Fund, Algeria $70.00 37 Fundo Soberano do Brasil, Brazil $8.50 15 Libyan Investment Authority, Libya $65.00 38 Pula Fund, Botswana $6.90 16 Mubadala Development Co., United Arab Emirates $64.00 39 Oil Income Stabilization Fund, Mexico $6.20 17 International Petroleum Investment Co., United Arab Emirates $61.80 40 Sanabil al-Saudia, Saudi Arabia $5.30 18 Reserve Fund, Russia $61.40 41 Fundo Soberano Angolano, Angola $5.00 19 Korea Investment Corp., South Korea $50.00 42 Heritage and Stabilisation Fund, Trinidad and Tobago $4.50 20 Kazakhstan National Fund, Kazakhstan $47.40 43 Pension Reserve Fund, Chile $4.40 21 Papua New Guinea Sovereign Wealth Fund, Papua New Guinea $47.30 44 Arab Petroleum Investments Corp., Saudi Arabia $4.30 22 Brunei Investment Agency, Brunei $39.30 45 Government Petroleum Insurance Fund, Norway $3.60 23 Khazanah Nasional, Malaysia $35.30 *Source: 2012 Databook – Pension and Investments, Dec 24, 2012. 6
Case Studies: Norges Bank & Abu Dhabi Investment Authority Fund : Abu Dhabi Investment Authority Fund : Government Pension Fund Global Country : United Arab Emirates (UAE) Country : Norway Inception Date : 1976 Inception Date : 1996 Seed Funding : $0.00 Seed Funding : $300 million Size Today : $627.00 billion Size Today : $665.30 Billion Source of Funds : Oil revenue, investment proceeds Source of Funds : Oil revenue, investment proceeds Historical Returns : 30 year annualized returns–8.1%; 20 year Historical Returns : Long term average return on assets–5% annualized returns–7.4% Portfolio Construction : Equities: 60%; fixed income: 35-40%; Portfolio Construction : Developed Equities: 35-45%; Middle East Real Estate: 5% Equities: 10-20%; Small cap Equities: 1-5%; Government Bonds: 10-20%; Alternatives: 5-10%; private Equity:2-8%; Infrastructure: Impact on Country : 1-5%: cash 0-10% Stabilization Fund indirectly instrumental to Norway weathering the Euro Crises Impact on Country : Norwegian government currently transfers $1bn a week Key to stabilizing Dubai during Financial Crisis into the Fund. Infrastructure Improvement in UAE coinciding with SWF emergence as a global players Future generations Savings Fund investing in High Tec *Source: 2012 Databook, Pension and Investments, Dec 24, 2012. Sovereign Wealth Fund Initiative, The Fletcher School—Tufts University 7
Case Studies: Temasek Holdings & Kuwait Investment Authority Fund : Temasek Holdings Fund : Kuwait Investment Authority Country : Singapore Country : Kuwait Inception Date : 1974 Inception Date : 1953 Seed Funding : $286 million ( grant of govt. owned assets) Seed Funding : $ N/A Size Today : $247.70 billion Size Today : $296.00 billion Source of Funds : State-owned assets, dividends, Source of Funds : Oil revenue, investment proceeds divestments, borrowings, bond issues, periodic cash injection Historical Returns : 20 year annualized returns–8.5% Historical Returns : Annualized returns since inception– Portfolio Construction : N/A 17.0%; 20 year annualized returns–15% Impact on Country : Portfolio Construction : 60% fixed income; 35% equities; 5% alternative investments Economic stabilization and rebuilding of Kuwait after first Gulf War Impact on Country : Continued stabilization of the economy through the Commercialization, management, and eventual sale/listings Infrastructure Investment in Kuwait. of state owned enterprises Instrumental to creation of industrial base in Singapore – owning key strategic industries. *Source: 2012 Databook, Pension and Investments, Dec 24, 2012. Sovereign Wealth Fund Initiative, The Fletcher School—Tufts University 8
Case Studies: Recent Examples Country Fund Inception Facts Libyan Investment Authority August 2006 • AUM: $65.0 billion • Income source: Oil revenues Libya Timor-Leste Petroleum August 2005 • AUM: $9.7 billion Fund • Income source: Oil and gas East Timor Pula Fund 1994 • AUM: $6.9 billion • Income source: diamonds and minerals Botswana Fundo Soberano Angolano October 2012 • AUM: $5.0 billion • Income source: oil revenues Angola *Source: 2012 Databook, Pension and Investments, Dec 24, 2012. 9
Evolution of the NSIA The concept of the SWF is not new and is steeped in the historical policy of the Federal Government to establish a savings base for the future: – Since 2003, four Ministers of Finance have worked to realize the SWF – Excess Crude Account upon which the SWF concept is anchored The NSIA was created by an Act of the National Assembly: – Nigeria Sovereign Investment Authority (Establishment, etc.) Act, 2011 – Signed into law by the President on 26 th May 2011 – NSIA Act written with best practices of the Santiago Principles in mind Recent Updates: – The Board of the NSIA was inaugurated on 9 th October, 2012 – The NSIA plans to commence securities invest from June 2013, which is a record time according to our peer group of sovereign wealth funds – The International Forum of Sovereign Wealth Funds (IFSWF) has invited the NSIA to apply for observer status, an interim step before full membership. NSIA will present credentials in Oslo, Norway in October 2013 10
Governance & Management Structure . Governing Council Board of Directors (9 members) Internal Authority Managing Audit Secretary Director/CEO Chief Head of Chief Chief Chief Legal Financial Human Investment Risk Officer Officer Officer Resources Officer 11
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