Interpretative Guidance Note on Private Equity Fund Rules

Interpretative Guidance Note on Private Equity Fund Rules

This Interpretative Guidance Note (IGN) seeks to clarify the provisions of the amended rules 558, 560(b), and 560(c) of the Private Equity Fund Rules published on the Commission’s website on April 24, 2025.

The IGN is issued further to enquiries from the Private Equity and Venture Capital Association of Nigeria (PEVCA).

S/N

RULE

GUIDANCE

1

Amended Rule 558 – Applicability
“A Private Equity Fund shall be subject to authorization and registration by the Commission. Provided that Private Funds with a target fund size of ₦5 billion or less shall not be subject to registration but shall file governing documents as provided for under the general requirements in these Rules for the purpose of obtaining a "no objection" from the Commission prior to raising capital.”

In order to obtain a “no objection” from the Commission, kindly refer to the updated Ease of Doing Business Document 2025, which provides a checklist to be executed by the board(s) of the fund manager and sponsor, including a requirement for a sworn undertaking. Both the checklist and the undertaking should be notarized.

2

Amended Rule 560(b) – Restrictions
“Where a Private Equity Fund targets pension fund assets, the Private Equity Fund Manager shall at all times maintain a proprietary investment of not less than 3% of the fund size in the Fund.
Provided that where a sovereign wealth fund or any multilateral development finance institution is an investor in the Private Equity Fund, the fund manager shall maintain a minimum proprietary investment of 1% in the Fund.”

Sub (b) does not regulate the type of funds PFAs can invest in; It regulates the minimum proprietary holding for fund managers who establish PE Funds. This requirement is identical to the requirement in the Infrastructure Fund Rules established and operational since 2017. Fund managers and their funds are subject to the SEC’s registration and regulation.

3

Amended Rule 560(c) – Restrictions
“The total management fees and expenses of a Private Equity Fund shall not exceed 2% of the total sum raised in Nigeria;”

Sub (c) relates to the fees and expenses of the fund manager, not the fund. Similar to infrastructure funds, there is no regulatory cap on fund expenses for alternative investment schemes. The caps are on the manager’s fees/expenses and on incentive fees charged by the manager. The practice is to disclose a cap on total expenses as required by investors.