Economy
Understanding Private Equity and Alternative Investments
By FBNQuest
Although there are a variety of options for raising capital and attracting investors, equity is one of the two most sought-after options.
It allows a company to give a share of ownership of its business to an investor in expectation of a return as the business grows. Unlike public equity (stock market) with ownership of shares in a public company, private equity (PE) simply means ownership of shares in a private company.
Private equity is a type of capital investment (asset or security) made to (target) companies that are not publicly traded on a stock exchange.
As an alternative form of private financing, private equity allows investors directly invest in companies through which such investors gain an ownership stake in the companies. Investors seek PE funds to earn returns that are considered to be better than those from the public equity markets.
To avoid debt, companies can sell their stocks to raise money that can be used to fund new technology, make acquisitions, expand working capital, and fund projects geared towards business growth.
Usually, the financial information on stocks of such a company is not disclosed to the public, rather, an investor can only speculate on the asset worth of the intending company.
Private equity involves three parties: the investors who supply the capital, the private equity firm that manages and invests the money on behalf of the investor via a private equity fund, and the company (known as Portfolio Company) that the private equity firm invests in.
A private equity firm’s ultimate goal is to sell or exit portfolio companies to deliver superior returns (above the benchmark return also referred to as Internal Rate of Return (IRR) to earn carried interests).
The most widely adopted investment strategies by PE investments are leveraged buyouts (LBOs) and venture capital (VC) investments.
In LBOs, a PE firm will raise debt from institutional investors on the back of a target company and assume control of the target company, while using the cash flows of the target company to pay the acquisition capital. Whereas, the VC makes investment in young and fast-growing companies in an industry that has the potential for exponential growth while adding value to the firm being taken up. In some cases, PE firms grow and improve a middle-market company with the aim to sell or exit to a mature company within a specified period.
Generally, private equity firms are active investors who are involved in the board level and monitor the financial and operating performance of portfolio companies.
However, some private equity firms are involved in the day-to-day operations of portfolio companies and may take C-level positions such as CEO, CFO, CIO and COO to ensure that value creation initiatives are implemented in the portfolio companies to ensure that increase in revenue, improvement of operational efficiency and corporate governance.
A private equity fund is typically opened to institutional and accredited (individual or business entity) investors who invest large sums of money for a long period.
Institutional investors are companies or organisations like endowment funds, commercial banks, hedge funds, mutual fund managers, and insurance companies that invest money on behalf of other people.
Accredited investors on the other hand are individuals or a business entity that invest based on their income, net worth, asset size, governance status, or professional experience. The reason is that private equity as an asset class is generally illiquid and has a long lock-up period and only ideal for investors with a large asset size (or AuM).
Other alternative investments include infrastructure assets, art, antique furniture, automobiles, real estate, commodities, exchange-traded funds, and hedge funds.
The market performance of traditional investments and alternative investments are independent of each other, hence, the inclusion of alternative investments in a portfolio can reduce its risk through diversification.
Before the coronavirus outbreak, PE investments in Nigeria have been flourishing and as a result, in 2019, Nigeria was described by the African Private Equity and Venture Capital Association (AVCA) as one of the most attractive destinations for PE investments. Between January and February 2019, PE in Nigeria recorded investments worth N277.64 billion ($767 million), an improvement of 345 per cent compared to N62.37 billion ($172 million) worth of deals closed during the corresponding period in 2018.
The deals within the first two months of 2019 included the 100 per cent acquisition of Chi Ltd by Coca-Cola Company for the sum of $500 million, which accounted for 65 per cent of the total private equity investments within that period.
Other notable deals included Access Bank Plc’s acquisition of Diamond Bank Plc, the Partech- led Series A funding of Kudi, a financial services provider, and the acquisition of Wakanow, a travel agency, by the Carlyle Group valued at $40 million, to mention a few.
Why invest in private equity?
Private equity firms have grown over the years to become attractive investment vehicles for wealthy individuals and institutions who manage large pools of capital.
PE often guarantees better returns compared to other investments, with some private equity managers outperforming the public markets.
To diversify holdings, investors turn to private equity for higher returns than do public market. Specifically, such investments are for investors who can afford to have capital locked up for long periods.
Investors in private equity funds are called limited partners. As a limited partner, you get a return on your investment when the private equity firm sells the company it purchases while the private equity firm (also called general partners) takes some percentage as profit.
In Nigeria, different PE firms like FBNQuest Funds have their specific deal sizes, investment horizons, sector focus, fundraising timelines, and exit strategies.
As one of the leading alternative investments managers in Nigeria, FBNQuest Funds has been in operations for over 17 years and has invested in over 70 private companies through direct investing and their expertise and exposure to PE and VC Funds. Domiciled in Nigeria, the firm has investments in companies in Nigeria and other countries within the Sub-Saharan Africa region.
By Adedapo Adesanya
US sanctioned Russian oil giant Lukoil, will sell its foreign assets, including those in Nigeria and five other countries, to the US investment firm, The Carlyle Group.
According to an announcement on Thursday, Lukoil reached an agreement with the US investment firm on the sale of Lukoil International GmbH, the holding company that owns the group’s non-Russian international assets.
These foreign assets include shares in oil fields and refineries across the globe, including in Iraq, Azerbaijan, Egypt, the United Arab Emirates (UAE), Nigeria, and Mexico.
The sale follows the US sanctions on Lukoil and Rosneft, “as a result of Russia’s lack of serious commitment to a peace process to end the war in Ukraine.”
The Donald Trump administration in October 2025 had carried out the decision to put pressure on Russia’s state finances, adding the country’s two largest oil producers, Lukoil and Rosneft, to its blacklist of sanctioned entities. The US had initially given the oil firm one month to sell the holdings before gradually extending it as negotiations dragged on.
Lukoil had announced that same month that it would sell all of its international assets, initiating a formal process to receive bids from potential buyers.
After months of negotiations with potential buyers and one preliminary agreement with Gunvor blocked by the US Treasury, which described the trading group as “the Kremlin’s puppet”, it has now signed an agreement to sell Lukoil International GmbH to Carlyle.
Companies working with the sanctioned firms risk secondary sanctions that would deny them access to US banks, traders, transporters, and insurers.
The agreement is not exclusive and is subject to conditions such as the procurement of necessary regulatory approvals, including permission from the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) for the transaction with Carlyle.
Carlyle said that the agreement “has been structured to be fully compliant” with US Treasury policies and that it was “conditional upon Carlyle’s due diligence and regulatory approvals”.
Prior to the Carlyle news, other US oil and gas supermajors Chevron and ExxonMobil, and International Holding Company (IHC) of Abu Dhabi expressed interest to the US Treasury to potentially acquire Lukoil’s international assets.
The sale would further dent Russian economy which has been struggling because of its war in Ukraine and Western sanctions have increased inflation and slowed economic growth. In 2025, the country’s oil and gas revenues, which make up about a quarter of government income and help fund the war, fell to their lowest level in five years.
By Adedapo Adesanya
The chief executive of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Mrs Oritsemeyiwa Eyesan, has assured investors of a transparent, merit-based and competitive process for Nigeria’s 2025 oil and gas licensing round.
Mrs Eyesan, gave the assurance on Wednesday while speaking at a Pre-Bid Webinar organised by the commission, noting that only applicants with strong technical, financial credentials, professionalism and credible plans would proceed to the critical stage of the bidding process.
The NUPRC in December 1, 2025 inaugurated Nigeria’s 2025 Licensing Bid Round, offering 50 oil and gas blocks across frontier, onshore, shallow water, and deepwater terrains for potential investors.
The basins included Niger Delta basin, with 35 blocks, Benin (Frontier) with three blocks, Anambra (Frontier), with four blocks, Benue (Frontier), with four blocks and Chad (Frontier) with four blocks on offer.
Mrs Eyesan explained that the licensing process would follow five stages: Registration and pre-qualification, data acquisition, technical bid submission, evaluation, and a commercial bid conference, with only bidders that meet strong technical and financial criteria progressing.
The NUPRC executive said the 2025 Licensing Round represented a deliberate effort by Nigeria to reposition its upstream petroleum sector for long-term investment, transparency, and value creation, amid increasing global competition for capital.
She said that energy security and supply resilience had become key global economic and geopolitical priorities, while investment capital was increasingly selective and disciplined.
“Our national priority is clear: to attract capital, grow reserves, and improve production in a responsible and sustainable manner.
“A structured and transparent licensing round is essential to achieving these objectives.
“The NUPRC is legally mandated to conduct licensing rounds in a periodic, open, transparent, and fully competitive manner and the entire 2025 process will be governed strictly by published rules,” she said.
The official further revealed that, with the approval of President Bola Tinubu, signature bonuses for the 2025 round have been set within a range designed to lower entry barriers and prioritise technical capability, credible work programmes, financial strength, and speed to production.
She emphasised that the bid process will fully comply with the Petroleum Industry Act (PIA) and remain open to public and institutional scrutiny through the Nigeria Extractive Industries Transparency Initiative (NEITI) and other oversight agencies.
By Adedapo Adesanya
Four price losers weakened the NASD Over-the-Counter (OTC) Securities Exchange by 0.06 per cent on Wednesday, January 28.
The decliners were led by Afriland Properties Plc, which lost N1.53 to close at N14.50 per share compared with the previous day’s N16.03 per share, Geo-Fluids Plc dropped 50 Kobo to end at N6.35 per unit versus Tuesday’s price of N6.85 per unit, Central Securities Clearing System (CSCS) Plc declined by 35 Kobo to N40.15 per share from N40.50 per share, and Food Concepts Plc decreased by 28 Kobo to sell at N2.72 per unit versus N3.00 per unit.
As a result, the market capitalisation of the bourse went down by N1.3 billion to N2.173 trillion from the N2.174 trillion it ended a day earlier, and the NASD Unlisted Security Index (NSI) fell by 2.17 points to 3,632.56 points from Tuesday’s 3,634.73 points.
In the midst of the profit-taking, some securities witnessed bargain-hunting, with Nipco Plc gaining N22.00 to close at N242.00 per share versus N220.00 per share of the previous session, FrieslandCampina Wamco Nigeria Plc improved by N4.00 to N68.00 per unit from N64.00 per unit, and Acorn Petroleum Plc added 8 Kobo to finish at N1.38 per share versus N1.30 per share.
At midweek, the volume of securities transacted by the market participants surged by 259.9 per cent to 4.7 million units from 1.3 million units, but the value of securities went down by 8.6 per cent to N52.4 million from N57.3 million and the number of deals shrank by 15.8 per cent to 32 deals from 38 deals.
CSCS Plc remained the most traded stock by value (year-to-date) with 15.3 million units exchanged for N622.4 million, followed by FrieslandCampina Wamco Nigeria Plc with 1.6 million units valued at N108.4 million, and Geo-Fluids Plc with 8.9 million units worth N60.3 million.
CSCS Plc was also the most traded stock by volume (year-to-date) with 15.3 million units sold for N622.4 million, followed by Geo-Fluids Plc with 8.9 million units exchanged for N60.3 million, and Mass Telecom Innovation Plc with 8.4 million units traded for N3.4 million.
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