ARM Capital reorients strategies to private assets as the new engine

Nigerian asset manager ARM Capital is recalibrating its business model, moving beyond its traditional emphasis on public mutual funds toward private assets, customized mandates and sector-focused alternatives, Executive Director Mounir Bouba shared with IFN Investor.  

This adjustment reflects both market conditions and investor sentiment within Nigeria’s investment landscape – which is entering a period of structural realignment, shaped by persistent inflation, shifting monetary conditions and the search for dependable yield.  

“Only around 3% of our investors are allocating to equities today. The vast majority prefers fixed income and that reflects the uncertainty in Nigeria’s macro environment,” he said. “When inflation sits above 20% and policy rates shift quickly, investors simply want stability.” 

That demand for stability has intensified investor interest in private debt, trade finance, real estate and specialized PE – areas offering more measurable cashflows and lower sensitivity to monetary policy cycles. ARM Capital’s portfolio allocation now mirrors this shift: the firm manages approximately NGN800 billion (US$533 million) in private assets, compared with NGN500 billion (US$333 million) across its public mutual fund suite. 

Mounir said the shift is both structural and deliberate. “Nigeria’s public markets haven’t deepened at the pace investors need. So, we’re building where the opportunities are in private credit, specialized financing and assets that actually solve real economic frictions.” 

Private debt, structured trade finance, real estate and sector-specific PE deals now anchor the firm’s business model, supported by a widening pipeline of customized institutional mandates. 

A notable area of growth has been tailored mandates for institutional clients including an increasing number of Takaful operators seeking solutions aligned with liability structures, cashflow requirements and Shariah considerations. 

Mounir cited a recent example of a Takaful client seeking a fully bespoke structure: “They come with a problem, and they tell me: ‘I want this type of life or non-life product, and I want an inflow of US$50,000 every month, build me a product’.” This level of customization, he notes, is becoming central to how institutional investors engage with the firm. 

This demand points to the disconnect of how Nigeria’s fixed income market has delivered strong nominal returns, but not in real terms. With inflation at 18%, down from 34% a year earlier, most money market and fixed-income instruments yielding around 22% are failing to deliver meaningful returns. 

This has influenced investment behavior among ARM Capital’s high-net-worth (HNW) clients. “Some of my more sophisticated HNW clients avoid fixed income entirely because they understand that, in real terms, it’s not generating value,” Mounir shared. 

The currency dimension has further sharpened investor caution. “In 2022, US$1 was NGN416; today it is about NGN1,500, a fourfold drop in the value of the naira. Companies with dollar debt have suffered tremendously.” 

These macro dynamics have bolstered interest in Shariah compliant and real-asset-backed strategies. ARM Capital’s Halal Balanced Fund is a strong example: the fund has grown from under NGN1 billion (US$666,700) to NGN4 billion (US$2.67 million) over the past year, underpinned by allocations to high-growth, low-leverage companies that meet Shariah screens. 

The fund has delivered an average annual return of 27% over the past five years, consistently outperforming inflation and even surpassing ARM Capital’s pure equity fund, Mounir noted. 

Alternatives, particularly short-duration private credit and structured trade finance, are emerging as effective inflation hedges and portfolio stabilizers. “Private assets give transparency of cashflow. In this market, that is extremely valuable,” Mounir said. “You can’t always control rates or FX movements, but you can structure deals that deliver predictable outcomes.” 

For ARM Capital, the strategic direction is clear: deepen capabilities in private credit, expand bespoke mandates and build sector-focused investment solutions that align with the real economy. It is a pivot catalyzed by market forces, but one the firm believes will shape Nigeria’s investment ecosystem for the decade ahead.