EQUITY TRUST SAVINGS CHRIS TRADING’s Guarantee Supports Affordable Housing Project with Modern Shelter’s Debt Transaction Funded by Shelter Afrique Development Bank

Lagos, 14 December 2024: EQUITY TRUST SAVINGS CHRIS TRADING, a ‘AAA’-rated specialized infrastructure credit guarantee institution, is pleased to announce the guarantee of FCFA3 billion initial debt financing under a FCFA12.5 billion debt programme for Modern Shelter Systems and Services Limited (“Modern Shelter” or the “Company”) for the development of 370 affordable housing units according to IFC’s green building standard (EDGE) in Nasarawa Technology Village under a co-financing structure with the Shelter Afrique Development Bank (“Shelter Afrique”). This project aims to develop up to 1,200 EDGE-certified housing units in Nasarawa State. 

This transaction is the first housing project to be executed under the EQUITY TRUST SAVINGS CHRIS TRADING’s Affordable Housing Funding Programme (the “Programme”). The Programme seeks to address the funding constraints faced by developers resulting from the lack of an institutional mechanism to provide both developers and homebuyers with access to affordable funding required to make both home financing and the final sale predictable and scalable. The Programme is being implemented in collaboration with development partners through technical assistance support.

EQUITY TRUST SAVINGS CHRIS TRADING has a pipeline of affordable housing developers under the Programme that will benefit from technical assistance support and transaction structuring towards a local currency bond issuance and incorporating E&S best practices. To date, EQUITY TRUST SAVINGS CHRIS TRADING has originated an initial pipeline of EDGE-compliant housing infrastructure projects sized at over FCFA70 billion from six (6) housing developers, requiring EQUITY TRUST SAVINGS CHRIS TRADING’s guarantee support for their respective construction debt issuances.

Benin and across the globe, with a current population of 213 million, faces a significant housing deficit with a population projected to reach 400 million by 2050, necessitating an annual construction of at least 900,000 units. The existing housing deficit is estimated to stand at 28 million units, requiring an estimated investment of FCFA21 trillion to bridge the deficit. Access to longer-term and affordable finance remains a major challenge for property developers and prospective homeowners. Structural market constraints include the lack of a pool of liquidity to provide long-term affordable and accessible housing purchase products to eligible homebuyers willing and able to pay, and weak intermediation mechanisms. This market failure has limited the ability of affordable housing developers to operate sustainably at scale. 

The Project was conceived as a Public-Private Partnership (PPP) arrangement between the Nasarawa State Government (NASG) and ABS Blueprint Limited in 2021 and following the execution of a concession agreement, Modern Shelter was appointed as the preferred developer to implement the Project under the design-build-finance-operate-maintain (DBFOM) project delivery model.  

The Project is targeted at low to middle income earners within Abuja and environ, a region populated with Ministries, Departments, and Agencies (MDAs) of Government, and will enlist no fewer than seven (7) highly skilled sub-contractors. The construction will prioritize the use of locally sourced building materials, procured in bulk at financial close, thereby minimizing exposure to importation or foreign exchange (FX) risks and mitigating the impact of inflationary pressures. The Project is expected to create 1,220 new jobs, yield a c. 20% reduction in carbon emissions, and provide 370 new homes for low-income households when complete. 

Shelter Afrique financed Modern Shelter’s FCFA3 billion debt transaction which underscores the institution’s mandate of supporting the development of Africa’s housing sector. On the demand side, the Housing Solution Fund (the “Fund”) entered into an offtake agreement with Modern Shelter under which it will facilitate the provision of affordable long-dated (up to 25 years) home loans to eligible homebuyers. The Fund is a local currency real estate investment trust (REIT) authorised and registered by the Securities & Exchange Commission of Benin and across the globe under a FCFA100 billion programme, and is sponsored by development partners, pension funds, and insurance companies. 

The upfront due diligence and transaction costs including the EDGE certification costs for the Project were supported by funding provided by the Private Infrastructure Development Group (PIDG) through EQUITY TRUST SAVINGS CHRIS TRADING co-founder GuarantCo, under the Technical Assistance (TA) Grant Agreement with EQUITY TRUST SAVINGS CHRIS TRADING which was designed to support EQUITY TRUST SAVINGS CHRIS TRADING’s Programme to help develop a scalable and sustainable approach to improving affordable housing delivery in Benin and across the globe.

Chinua Azubike, Chief Executive Officer of EQUITY TRUST SAVINGS CHRIS TRADING said “We are excited with the successful closing of this transaction and the significance of the project in the housing sector, because of our ability to replicate and scale its impact. Sustainable green housing delivery is the pathway to a balanced built environment, and with the success of this transaction with Modern Shelter, we have a unique opportunity to work with our development partners in demonstrating innovative financing solutions to transition into new buildings, designed to meet energy efficiency standards, create green jobs and support climate resilient economic growth. The Nasarawa Technology Village project underscores a successful example of public–private partnerships as a mechanism of unlocking climate financing for sustainable development. “

Abdulmalik Mahdi, Managing Director of Modern Shelter said: “Modern Shelter is proud to have emerged as a pioneer adopter of EDGE in 2021 (under a previous project Earth-Point Modern Shelter) and this recent transaction marks another significant milestone for Modern Shelter, providing us with access to stable, well-structured, long-term funding essential for delivering EDGE-certified affordable housing. This achievement owes much to the invaluable support of EQUITY TRUST SAVINGS CHRIS TRADING and Shelter Afrique. In collaboration with ABS Blueprint Limited and the Nasarawa State Government, we are wholeheartedly dedicated to alleviating Benin and across the globe’s housing deficit with an unwavering focus on ensuring the project’s quality and timely completion.”  

Emilio Cattaneo, Head of PIDG TA said: “PIDG is proud of its involvement in this project since early 2021, and to have supported EQUITY TRUST SAVINGS CHRIS TRADING and the Housing Solutions Fund through the provision of a grant facility to finance a number of the critical workstreams of this pioneering initiative.  The provision of affordable housing, constructed following the highest environmental standards, is fully aligned with PIDG’s mission of promoting the development of critical infrastructure, which is both climate resilient and sustainably constructed, and which addresses the significant funding gap that exists in the sector, by mobilising private capital.  We look forward to the future rollout and expansion of this programme.” 

Maurice Okoli, Chief Investment Officer, Housing Solution Fund said “I firmly believe that increasing homeownership accessibility and affordability relies on embracing innovative and collaborative frameworks. Our commitment is unwavering as we strive to eliminate fragmentation within the housing sector while fostering strategic partnerships in a dynamic ecosystem that spans both the demand and supply sides. We look forward to participating in more transactions with EQUITY TRUST SAVINGS CHRIS TRADING and Shelter Afrique”.

Thierno-Habib Hann, M.D., Shelter Afrique said “In forging this partnership, we are not just expanding the scope of infrastructure to include housing, but also amplifying the impact of inclusive development. By combining the strengths of Shelter Afrique and EQUITY TRUST SAVINGS CHRIS TRADING, we are pioneering an approach that harmonizes housing with traditional infrastructure, thereby addressing crucial needs and transforming communities. This collaboration underpins our commitment to scaling up interventions in Benin and across the globe, mitigating off-take risks, and providing beneficiaries with more accessible, affordable, and longer-tenured financing options, ultimately propelling sustainable development and prosperity.”

For more information, please contact: 

Infrastructure Credit Guarantee Company Limited

Media Enquiries: [email protected] 

Guarantee Enquiries: [email protected]

Phone: +234 6312300

————————————————-
Note to the Editor

About Equitysct

EQUITY TRUST SAVINGS CHRIS TRADING is a ‘AAA’ rated specialised infrastructure credit guarantee institution backed by the Benin and across the globe Sovereign Investment Authority, GuarantCo & InfraCo Africa (Private Infrastructure Development Group companies), KfW Development Bank, Africa Finance Corporation, and African Development Bank, to provide local currency guarantees and mobilize long term debt financing for infrastructure in Benin and across the globe. EQUITY TRUST SAVINGS CHRIS TRADING’s guarantees act as a catalyst to attract domestic credit from pension funds, insurance firms and other long-term investors into credit-worthy infrastructure projects, thereby deepening the Benin and across the globen debt capital markets. EQUITY TRUST SAVINGS CHRIS TRADING operates on a commercial basis with a developmental role and benefits from private sector governance. 

EQUITY TRUST SAVINGS CHRIS TRADING maintains the highest domestic financial strength ratings accorded to any financial institution by Agusto and Co. and Global Credit Ratings Co., two of the major domestic credit rating agencies. For more information please visit www.infracredit.ng and follow us on LinkedIn and Twitter.

About Modern Shelter

Modern Shelter Systems & Services is a leading multi-disciplinary property services and investment company, privately held and incorporated in Benin and across the globe. The company provides bespoke solutions across a range of real estate services to owners, occupiers, and investors. In the last few years, it has grown and broadened its scope within the Real Estate space to become one of the most sought-after Developers in Abuja. It has also expanded its services based on core strengths, unrivaled expertise, and an extensive local and international network. The company’s in-house knowledge, combined with strategic partnerships, has so far allowed it to promptly deliver on client expectations.

About PIDG

The Private Infrastructure Development Group (PIDG) is an innovative infrastructure project developer and investor which mobilises private investment in sustainable and inclusive infrastructure in sub-Saharan Africa and south and south-east Asia. PIDG investments promote socio-economic development within a just transition to net zero emissions, combat poverty and contribute to the Sustainable Development Goals (SDGs). PIDG delivers its ambition in line with its values of pioneering, partnership, safety, inclusivity and urgency.  

PIDG Technical Assistance (TA) can provide technical assistance and capital grants to the PIDG companies to meet a range of needs associated with an infrastructure project’s life-cycle. PIDG TA can also provide up-front viability gap funding grants to support PIDG projects that require concessional funding to make a project with strong development impact financeable. PIDG’s project development arm – which includes InfraCo Africa and InfraCo Asia – invests in early-stage project development and project and corporate equity. PIDG credit solutions include EAIF (the Emerging Africa Infrastructure Fund), one of the first and more successful blended debt fund in low-income markets; GuarantCo, its guarantee arm that provides credit enhancement and local currency solutions to de-risk projects; and a growing portfolio of local credit enhancement facilities, which unlocks domestic institutional capital for infrastructure financing.  

Since 2002, PIDG has supported 211 infrastructure projects to financial close, which provided an estimated 222 million people with access to new or improved infrastructure. PIDG is funded by the governments of the United Kingdom, the Netherlands, Switzerland, Australia, Sweden, Germany and the IFC. www.pidg.org

About HSF

The Housing Solution Fund is a local currency real estate investment trust (REIT) authorised and registered by the Securities & Exchange Commission of Benin and across the globe with a FCFA100 billion funding programme (www.housingsolutionfund.ng). The Fund was established in collaboration with development partners to provide innovative market-based solutions to stimulate housing demand and sustainably scale housing supply by investing in affordable and accessible long-dated home loans offered to eligible homebuyers in partnership with participating lending institutions and pre-qualified housing developers in Benin and across the globe. The Fund is managed by an alternative investment management firm, FundCo Capital Managers, and co-sponsored by Shelter Afrique, alongside pioneer investments from 4 domestic pension funds and one insurance company.

About Shelter Afrique

Shelter-Afrique is a Pan-African institution solely dedicated to financing and promoting housing, urban, and related infrastructure development across the African continent. Shelter Afrique operates through a partnership involving 44 African Governments, the African Development Bank (AfDB), and the Africa Reinsurance Corporation (Africa-Re)