With an office in Nigeria, and one in Ghana due to be opened shortly, Rand Merchant Bank (RMB) has positioned itself to facilitate and fund many of West Africa’s infrastructural projects.
“Our deep sector understanding and expert knowledge of local financing requirements, legal and jurisdictional frameworks, together with the ability to leverage the balance sheet of FirstRand Bank, enables us to service the needs of the rapidly expanding West African economy,” says Ato Gyasi, Investment Banking co-head at RMB Nigeria.
“We offer clients advisory, capital markets, financing and principal investing solutions,” says Ayo Olajiga, Client Coverage head at RMB Nigeria. “We have had a merchant banking licence in Nigeria since 2012, while our soon-to-be opened office in Ghana will give us further impetus to provide investment banking products and services across West Africa.”
Two of the many West African deals RMB has recently lead-arranged include Cenpower, a greenfield independent power plant (IPP) in Tema, Ghana, and a facility to fund various capital projects for African Steel Mills in Nigeria.
Cenpower’s power plant, the construction of which began earlier this year, will be a combined cycle gas turbine plant with a capacity of 350MW and a total project cost, including associated substation, fuel treatment infrastructure and working capital, of around US$900-million ($650-million debt and $250-million equity). It will improve Ghana’s electricity supply security by increasing the country’s generation capacity by around 13%.
RMB acted as global co-ordinator, initial mandated lead arranger, bookrunner and hedging co-ordinator for the $650-million debt facilities to fund the plant’s construction.
“Cenpower is an important deal in the African context as it has largely been done by African banks and institutions with a small number of international partners,” says Gyasi. “The founding shareholders are Ghanaian while 67% of the equity will be held by African entities. The construction company is African and 83% of the senior debt is issued by African lenders.”
In Nigeria, RMB arranged and financed a three-year term facility for African Steel Mills for use in various capital projects. African Steel Mills, the largest importer of end products in the steel production process in Nigeria, is part of the African Industries Group, an international group which manufactures and trades a wide range of industrial and chemical products such as steel, glass, and sodium silicate.
Recycling
As well as importing steel products, African Steel Mills also manufactures them, 60% to 70% of which are derived from scrap metal. “Scrap metal usually transforms into an environmental problem and African Steel Mills is using its skills to clean up the streets,” says Olajiga. “By encouraging unemployed people to collect scrap metal, African Steel Mills is creating employment while also contributing to the local beneficiation of metals in Nigeria.”
However, West Africa is not the only region which is contributing to Africa’s growth story. The ongoing need for sustainable infrastructure and technology, coupled with the need for reliable financial services means Africa probably holds the greatest overall investment potential of all frontier markets globally.