Key Takeaways
- • The SEC issued Circular No. 26-1 on 16 January 2026, replacing a uniform capital threshold with a tiered, activity-based minimum capital framework for fund and portfolio managers in Nigeria.
- • Tier 1 full-scope managers with NAV or AuM above ₦20 billion must hold ₦5 billion minimum capital, up from ₦150 million; managers above ₦100 billion must hold at least 10% of NAV or AuM.
- • Tier 3 alternative investment managers face separate thresholds: PE managers at ₦500 million (up from ₦150 million, roughly 3x) and VC managers at ₦200 million (up from ₦20 million, roughly 10x).
- • The steeper VC increase is expected to weigh most on first-time and emerging managers, potentially slowing new fund formation and favouring consolidation and platform-building.
- • All affected entities must comply by 30 June 2027, subject to transitional arrangements at the SEC's discretion.
Summary
The Securities and Exchange Commission of Nigeria issued Circular No. 26-1 on 16 January 2026, introducing a revised, tiered framework for minimum capital requirements applicable to fund and portfolio managers. According to the analysis published by Legal 500, the most notable change for private capital is the explicit separation of private equity and venture capital managers into distinct capital categories for the first time.
Under the Tier 1 full-scope category, managers running collective investment schemes or alternative investment funds with net asset value above ₦20 billion, or discretionary or non-discretionary private portfolio management with assets under management above ₦20 billion, must now hold minimum capital of ₦5 billion, up from ₦150 million. Where NAV or AuM exceeds ₦100 billion, the manager must maintain capital equal to at least 10% of NAV or AuM. Tier 2 limited-scope managers, with funds capped at ₦20 billion, must hold ₦2 billion, also up from ₦150 million. Foreign instrument exposure is capped at 20% of NAV for Tier 2 and permitted up to 40% for Tier 1.
Within Tier 3, PE fund managers face a ₦500 million minimum, while VC fund managers face ₦200 million. Although the VC threshold is lower in absolute terms, the increase is roughly 10x its prior baseline compared with roughly 3x for PE, which the article describes as a steeper relative burden. The article attributes the calibration to differences in typical fund size, transaction scale and risk exposure, noting that PE increases are more absorbable for scaled managers while VC increases are material for early-stage and first-time managers.
The article analyses several possible effects. Institutionalisation is expected to favour well-capitalised PE platforms and established VC managers with strong sponsor backing. PE managers may respond through offshore structures, co-management or platform consolidation, while emerging VC managers may face greater pressure to delay launches, consolidate or operate as advisers rather than licensed managers. The revised thresholds are also likely to accelerate mergers, acquisitions and platform-based growth, with the article suggesting the effect will be more pronounced in venture capital. Multi-strategy platforms housing PE and VC within a single regulated group may become more attractive.
For the venture ecosystem, the article warns that higher entry thresholds could slow formation of new VC funds, particularly in niche sectors and underserved regions, potentially narrowing capital available to startups and SMEs and weakening the pipeline for later-stage PE. Suggested mitigants include phased compliance for Tier 3 managers, substance-based capital assessments during transition with recognition of sponsor-backed structures, proportionate supervision, and clear guidance on licence migration. Fund managers and sponsors are advised to assess capital and structuring strategies well before the June 2027 deadline.
Under the Tier 1 full-scope category, managers running collective investment schemes or alternative investment funds with net asset value above ₦20 billion, or discretionary or non-discretionary private portfolio management with assets under management above ₦20 billion, must now hold minimum capital of ₦5 billion, up from ₦150 million. Where NAV or AuM exceeds ₦100 billion, the manager must maintain capital equal to at least 10% of NAV or AuM. Tier 2 limited-scope managers, with funds capped at ₦20 billion, must hold ₦2 billion, also up from ₦150 million. Foreign instrument exposure is capped at 20% of NAV for Tier 2 and permitted up to 40% for Tier 1.
Within Tier 3, PE fund managers face a ₦500 million minimum, while VC fund managers face ₦200 million. Although the VC threshold is lower in absolute terms, the increase is roughly 10x its prior baseline compared with roughly 3x for PE, which the article describes as a steeper relative burden. The article attributes the calibration to differences in typical fund size, transaction scale and risk exposure, noting that PE increases are more absorbable for scaled managers while VC increases are material for early-stage and first-time managers.
The article analyses several possible effects. Institutionalisation is expected to favour well-capitalised PE platforms and established VC managers with strong sponsor backing. PE managers may respond through offshore structures, co-management or platform consolidation, while emerging VC managers may face greater pressure to delay launches, consolidate or operate as advisers rather than licensed managers. The revised thresholds are also likely to accelerate mergers, acquisitions and platform-based growth, with the article suggesting the effect will be more pronounced in venture capital. Multi-strategy platforms housing PE and VC within a single regulated group may become more attractive.
For the venture ecosystem, the article warns that higher entry thresholds could slow formation of new VC funds, particularly in niche sectors and underserved regions, potentially narrowing capital available to startups and SMEs and weakening the pipeline for later-stage PE. Suggested mitigants include phased compliance for Tier 3 managers, substance-based capital assessments during transition with recognition of sponsor-backed structures, proportionate supervision, and clear guidance on licence migration. Fund managers and sponsors are advised to assess capital and structuring strategies well before the June 2027 deadline.
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