Africa to turn to region for financing
Stanbic Bank Uganda has signed a $85m, 18-month syndicated loan with a group of mainly Gulfheadquartered banks, in a move that could see more African banks turn to the Middle East for financing.
Dubai-based Emirates NBD Capital was the sole coordinator and bookrunner for the financing. Al-Ahli Bank of Kuwait and the UKs Standard Chartered joined the deal as mandated lead arrangers. Al-Khalij Commercial Bank and Commercial Bank of Qatar participated as lead arrangers.
The transaction was the first time Stanbic Bank Uganda, which is a company within the South Africa-headquartered Standard Bank Group, has raised money in the international loan market.
The facility pays 250 basis points over the London inter-bank offered rate (Libor) and has a tenor of 18 months. The facility will be used for general corporate purposes, including trade finance.
Patrick Mweheire, executive director and head of corporate and investment banking for Stanbic Bank Uganda, said the deal is a significant milestone in terms of building relations between the Middle East, Uganda and the wider Sub-Saharan African region.
There are a few other banks in Uganda that are going to look at this [deal] very closely, Mweheire told MEED on the sidelines of a press conference on 28 January.
There is no way Africa is going to fund its growth without opening lines or attracting this capital, he added, commenting on the billions of dollars-worth of infrastructure investment Uganda needs.
In recent years, Western banks have pulled back from Africa due to the effects of the financial crisis and tightening regulation that has restricted some of the institutions appetite to lend.
Mweheire said Stanbic Bank Uganda will look to strengthen its links with Middle Eastern banks, potentially attracting more of the regions institutions into African fixed-income and foreign exchange markets as well as raising loans.
One of the things we wanted to do with this [deal] was to demonstrate that we can actually tap into the Middle East markets, he said. The idea would be to build on this relationship and try to get longer tenors.
Emirates NBD is one Gulf bank keen to expand its business into Africa.
What we really want to do is to facilitate trade finance. There is so much cross-trade between Africa, South-east Asia and China, Faisal Lalani, executive vice-president and head of institutional and international banking, at Emirates NBD tells MEED, adding that the UAE is well-placed to support these flows.
Other Standard Bank companies in Africa are likely to look at raising new financing or refinancings this year, with Middle East banks potentially playing a role.
I would imagine this year it is probable that we will do another deal with one of the entities in the group, Gerald Nolan, head, international loan finance, treasury and capital management, group finance, at Standard Bank, based in South Africa, tells MEED.
Standard Banks Nigerian and Kenyan-based entities could be likely candidates for future loan-raising activities.