FSL Asset Management has introduced a new Commodity Fund aimed at directing non-bank capital into Nigeria’s agricultural sector while giving retail and institutional investors regulated access to commodity-based investment opportunities.

The asset manager announced the product at a media briefing in Lagos, where its Chief Executive Officer, Adetola Odukoya, explained the strategy behind the investment vehicle alongside members of the company’s executive team.

Also present at the briefing were Sunday Kadiri, Team Lead, Fund Operations; Yussuff Abdulfatai, Head, Sales and Marketing; and Victor Adaha, Head, Brands and Communications.

The Commodity Fund is structured as an open-ended unit trust scheme operating under the guidelines of the Securities and Exchange Commission (SEC). Its investments will focus mainly on securitised agricultural contracts, commercial papers issued by leading agricultural companies and exchange-traded commodities listed on registered platforms, including the AFEX Commodities Exchange and Lagos Commodities Exchange.

The fund has a minimum initial subscription of N5 million for high-net-worth individuals and qualified institutional investors, with investors required to maintain their holdings for at least 90 days.

Speaking at the launch, Odukoya said the fund was established to tackle two key challenges affecting Nigeria’s agricultural market: inadequate access to affordable and flexible financing for agricultural businesses and investors’ increasing exposure to unregulated commodity investment schemes.

“Agriculture accounts for roughly 25 to 30 per cent of Nigeria’s GDP and remains a key driver of economic growth, yet the sector continues to face severe capital constraints,” he said.

Odukoya said the fund would create a regulated investment channel for individuals and institutions seeking exposure to agricultural assets while directing funding towards legitimate businesses operating throughout the agricultural value chain.

“With this commodities fund, we are creating a transparent, SEC-regulated gateway that allows investors to earn competitive real returns from high-growth agricultural assets while providing much-needed, lower-cost financing to legitimate operators across the agricultural value chain,” he said.

Alongside the Commodity Fund, FSL Asset Management unveiled the FSL Balanced Fund, a N2 billion open-ended investment scheme designed to generate moderate capital growth through a diversified mix of equities, fixed-income securities and money-market instruments.

The Balanced Fund requires a minimum subscription of 100,000 units, equivalent to N100,000, and has a 90-day minimum holding period.

With the addition of the two products, FSL Asset Management’s active mutual fund portfolio has increased to four funds. The new offerings join its existing Money Market Fund and Eurobond Fund.

FSL Asset Management traces its origins to a unit within Fidelity Bank before undergoing restructuring following Central Bank of Nigeria directives relating to non-core banking operations. The company now operates as a subsidiary of FSL Capital, a holding group with more than 38 years of operational history.

The asset manager currently oversees more than N50 billion in assets under management and has received an investment manager rating of Triple-B from Agusto & Co.

The company also has shareholders’ funds exceeding N2 billion and is working to increase its capital base towards the N5 billion minimum capital requirement for tier-one asset management firms.

Odukoya said FSL Asset Management intends to roll out additional investment products, including dedicated equity and fixed-income funds, before the end of the year.

The Commodity Fund launch comes amid continuing financing challenges in Nigeria’s agricultural sector, despite the industry’s contribution to economic activity and employment.

Through investment products designed to connect institutional and high-net-worth capital with agricultural and commodity markets, FSL Asset Management aims to broaden the financing available to businesses across the sector while providing investors with access to regulated investment opportunities.

Source: MSME Africa Online