NIGERIA Law and Practice Contributed by: Tosin Ajose, Izuchukwu Ubadinma, Deborah Leshi and Precious Omope, DealHQ Partners
Regulatory approval is critical. Foreign companies seeking to operate in the petroleum sector must also register locally to comply with regulatory require- ments. Operators cannot commence activities without obtaining licences and permits from agencies such as the NUPRC, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), the Nige- rian Electricity Regulatory Commission (NERC) and other relevant state ministries. These approvals define operational boundaries, environmental and safety standards, fiscal obligations and broader compliance requirements. Financing typically combines founder equity, angel investment and increasingly blended finance – mixing equity, concessional debt and grants to manage risk and attract private capital. Special Purpose Vehicles (SPVs) are commonly used to isolate project risks and align investor rights. Foreign investors must comply with Central Bank of Nigeria (CBN) rules to ensure proper documentation and the repatriation of funds. Tax incentives may be available for renewable energy or priority infrastructure projects, while all companies remain subject to the Nigerian Tax Act (2025). Early- stage ventures are moderately common in Nigeria, with renewable energy, off-grid solar, compressed natural gas (CNG) and electric vehicle (EV) infrastruc- ture recording the most activity. Upstream oil and gas projects are rarer due to high capital requirements and regulatory complexity. In infrastructure, transport, housing and digital network projects increasingly lev- erage public-private partnerships and SPVs, although large-scale mega-projects remain the domain of In Nigeria, early-stage companies in the energy and infrastructure sectors typically achieve liquid- ity through strategic mergers or acquisitions, where founders and early investors exit by selling their stake to a larger company, often receiving cash or shares in the acquirer, or a combination of both. Secondary share sales have also become increasingly common, allowing shareholders – founders, angel investors or employees with stock options – to sell part of their equity to new investors or trigger company buybacks where contractual rights exist. established operators. 2.2 Liquidity Events
When planning such exits, founders and investors must carefully consider the timing of the transaction relative to operational or project milestones, the meth- odology used to value the company, and the poten- tial tax implications under the Nigerian Tax Act 2025. Additional factors, such as regulatory approvals, cur- rency fluctuations, financing restrictions and obliga- tions under public-private partnerships or concession agreements, can materially affect both feasibility and profitability. As a result, structured exit planning and thorough due diligence are essential to maximise val- ue and ensure a smooth liquidity event. Spin-offs are not customary in Nigeria’s energy and infrastructure sector, although they are recognised as an internal restructuring option for public companies under Nigerian law. The key drivers for considering a spin-off include the need to focus on core operations, ring-fence liabilities and attract targeted investment, especially in high- growth areas such as renewables, gas processing and digital infrastructure. Spin-offs also enable companies to partly eliminate debt from their balance sheets, improve capital efficiency and position newly created entities for green or blended-finance participation. Goals include: 3. Spin-Offs 3.1 Trends: Spin-Offs • to meet policy or sector reform requirements man- dating the separation of business segments (for example, generation, distribution and transmission in the power sector); • to allow the parent company and the new entity to focus on distinct business areas or strategies; • to create a standalone vehicle that can attract new or targeted investment into specific opera- tions, such as renewable energy or infrastructure development; to streamline management, reduce complexity and improve performance by isolating non-core or underperforming units; and • to ring-fence liabilities, improve transparency and strengthen corporate governance structures.
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