In a significant move to tackle the persistent funding challenges faced by small and medium-sized enterprises (SMEs), ARM Investment Managers has officially launched a major private credit initiative. The ARM Private Debt Fund, a N200 billion programme, was unveiled at a recent event in Lagos, marking a pivotal development in Nigeria's financial landscape.
A Strategic Response to SME Financing Challenges
The launch of the fund comes at a crucial time for the Nigerian economy. Despite SMEs contributing nearly half of the nation's Gross Domestic Product (GDP) and employing over 80 per cent of the workforce, they consistently struggle to secure long-term, structured financing outside traditional banking channels. Factors such as regulatory limits, high interest rates, and constraints on bank balance sheets have widened this financing gap, which private credit funds are now poised to fill.
The Series I of the ARM Private Debt Fund is targeting an initial capital raise of N25 billion. This forms part of a broader N200 billion shelf programme that has been registered under the relevant regulatory frameworks. The fund is structured as a closed-ended vehicle, meaning it has a fixed lifespan and a set number of shares.
Investment Focus and Structure
The fund's strategy involves deploying capital primarily to high-quality, scalable SMEs across vital sectors of the Nigerian and broader sub-Saharan African economy. The financing will be delivered through several instruments designed to meet diverse business needs:
- Senior secured term loans
- Revolving credit facilities
- Selective subordinated debt
This approach aims to provide businesses with the patient, disciplined capital required for sustainable expansion and operational scaling.
Leadership and Vision for Economic Impact
Speaking at the launch event in Lagos, the Chief Executive Officer of the ARM Private Debt Fund, Deji Opeola, outlined the fund's core mission. He emphasized the vital role of private credit in modern financial systems, particularly for businesses that drive tangible economic activity.
"Private credit plays a vital role in modern financial systems by providing disciplined, patient capital to businesses that drive real economic activity," Opeola stated. "This fund has been deliberately structured to combine strong governance, rigorous credit underwriting, and active portfolio management."
He further clarified the fund's dual objective: to protect investor capital while fueling the growth of viable SMEs. The ultimate goal is to support enterprises that create jobs, strengthen local value chains, and make meaningful contributions to national economic development.
A Collaborative Launch
The launch event saw the presence of key figures from the financial and legal sectors, underscoring the collaborative effort behind the initiative. Attendees included Wale Odutola, Group Chief Executive Officer of ARM Holdings; Mounir Bouba, Executive Director at ARM Investment Managers; Sola Selene, CEO of Leadway Trustees; and Mrs. Yinka Edu, a Partner at UUBO law firm. Their collective presence highlights the multidisciplinary support essential for the fund's successful operation and governance.
Implications for Nigeria's Economic Future
The introduction of this substantial private debt fund represents more than just a new financial product; it is a strategic intervention in the economy. By providing an alternative source of capital, the fund can help bridge the structural financing gap that has long constrained SME growth. Access to appropriate long-term funding can enable these businesses to invest in technology, increase production capacity, hire more staff, and compete more effectively.
For investors, the fund offers a structured opportunity to participate in the growth story of Nigeria's resilient SME sector, which remains the backbone of the economy. The focus on strong governance and active management is designed to mitigate risks while capturing the significant upside potential of financing this underserved market segment.
The success of the ARM Private Debt Fund's Series I raise will be closely watched as a bellwether for investor confidence in private credit solutions for African SMEs. Its performance could pave the way for more such funds, deepening the capital market and providing a much-needed engine for inclusive economic growth and job creation across Nigeria.
