The African continent is the main area of focus for Rand Merchant Bank, the investment banking arm of FirstRand Bank, Africa's second largest financial institution and one of the largest companies listed on the Johannesburg Stock Exchange (JSE). Rand Merchant Bank, which is based in South Africa, has representations in numerous African countries where it has spent many years helping clients understand potential opportunities, and the challenges of doing business on continent. Its services include: acquisition finance, project finance, mergers and acquisitions financing and advice, debt and equity capital markets solutions, and financial risk management solutions.
"With prospects of high economic growth in many African countries, a growing middle class and improving governance, we are seeing the re-emergence of Africa as a region for investment opportunities and the consequent increased interest from global investors," says Rand Merchant Bank CEO Alan Pullinger. "We understand how the continent works and we provide a range of investment banking services to our clients to help them successfully source and conclude business on the continent."
Rand Merchant Bank's key focus in Africa is the resources sector, in which it has been involved since 1977, along with infrastructure development and the agriculture and telecommunications sectors. "We have experience in all commodities with our main thrust in terms of investment banking offerings being project finance solutions," says head of resource financing Henk Deist.
Rand Merchant Bank has done deals in more than 30 African countries in the past 15 years, most of which were in resources related businesses. Some of the larger resources transactions include: advising diamond mining company De Beers on the disposal of the Finsch diamond mine in Kimberley, South Africa; financial adviser, main underwriter and sponsor of the initial public offering and listing of Royal Bafokeng Platinum on the JSE; and acting as co-funder and lender for the expansion of the Morupule Colliery in Botswana; and Paladin Energy's uranium operations in Namibia. Some other deals in which it has been involved are joint mandated lead arranger for a project finance transaction for Anvil Mining in the Democratic Republic of Congo, lead arranger and underwriter for Avmin/Chambishi in Zambia, and lender to BP in Angola.
A natural extension to Rand Merchant Bank's mining business is upstream and midstream oil and gas project finance as Africa's contribution to global oil production increases each year. Rand Merchant Bank participated in the financing of the Jubilee oilfield in Ghana for Kosmos Energy and Tullow Oil and, most recently, in a pre-production financing facility for the Nigerian National Petroleum Corporation and ExxonMobil Nigeria.
Some infrastructure related deals concluded include: financing and advising a public-private partnership on the Lekki-Epe Expressway, a toll road in Nigeria; and structuring and financing the Adones undersea cable in Angola.
Along with its strategic focus on Africa, Rand Merchant Bank is developing links with China as Chinese, and other Asian investors, show a growing interest in Africa's resources, and sectors associated with mining, such as infrastructure. In 2009, FirstRand entered into a strategic co-operation agreement with the China Construction Bank to focus on joint financing and advisory services for Chinese and African companies. Both companies have provided dedicated teams to fulfil the mandate. Rand Merchant Bank's parent company FirstRand has operated a representative office in Shanghai since 2007 to help with trade between Africa and Asia.
"With our long track record, experience and client relationships, we believe we can provide Chinese companies with the necessary knowledge and expertise needed on the African continent," says Mark Treagus, head of international operations.
One of the more recent South Africa/China deals for which Rand Merchant Bank provided advice, was the acquisition of South African resources company Gold One International by a consortium of Chinese investors lead by Baiyin Nonferrous Metal Group.
Rand Merchant Bank continues to grow its Chinese/African business while increasing its visibility in Africa, and aims to be financier of choice across the African continent.