Societe Generale eyes project finance opportunities

29 December 2013

French bank sees appealing 2014 deal pipeline in the Mena region

Paris-headquartered bank Societe Generale is eyeing up opportunities for project finance in the Middle East and North Africa (Mena) region.

With a number of landmark projects in the power and water sector closing towards the end of 2013, the bank is seeing potential for further transactions in 2014.

In the final months of 2013, Kuwait’s Al-Zour North water and power plant project reached financial close, as did Saudi Arabia’s Rabigh 2 independent power project (IPP).

“Following the recent closing of Rabigh 2, we will be looking closely at future planned IPPs,” says Guillaume de Luze, managing director, deputy head of power, Europe, the Middle East and Africa (Emea) at Societe Generale.

“We are pleased to see the Kuwait Al-Zour North transaction close and will set the scene for future transactions,” he adds.

Dubai’s plans to venture into the project finance market for the first time have also caught the bank’s eye.

“We will be looking closely at the plans for the Hassayan coal-fired plant project financing,” De Luze says.

In North Africa, the bank is watching developments in Egypt carefully having worked on the country’s biggest project financing to date, which closed in 2012.

The financing was in support of the Egypt Refining Company’s $3.7bn refinery with a capacity to produce 4.2 million tons a year (t/y) of refined products.

“The Egyptian Refinery [ERC] deal… has had a challenging time, but things are getting easier. The government is supportive and the project is under construction. I am hoping the ERC will show that projects can still get done in Egypt,” says Stephen Craen, managing director, head of oil and gas at Societe Generale.

The renewables sector is another industry that should offer the bank some interesting opportunities in the long-term, according to Allan Baker, managing director, global head of power at Societe Generale.

“Renewables is a major growth area in the region. It has been slower taking off than thought, but in 2015 and 2016 there will be a lot more activity in solar projects and other renewables,” he says.

Volumes of project finance deals fell in 2012, compared with the previous year in the Middle East. Just $8.5bn projects closed in the Gulf and Egypt compared with $23bn in 2011, according to data from UK financial services company Dealogic. The decline was blamed partly on lack of long-term liquidity among the banks. 

The lack of appetite to lend long-term money remained a challenge for companies looking to raise project finance throughout 2013.

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