Has Africa found a new loan market in the Gulf?

VENTURES AFRICA – A surge in the rise of the Gulf region as a loan market for Africa and Asia has become real after Stanbic Bank Uganda got $85 million loan from the Gulf.

The Ugandan lender originally wanted to generate $75 million with an 18-month transaction in January.
However, the money was expanded to $85 million due to a strong surge in interest from other Gulf banks seeking a share of the business.

According to Reuters, the list of participating banks eventually included Dubai’s Emirates NBD, which was sole co-ordinator and bookrunner, mandated lead arranger Al Ahli Bank Kuwait, and Qatar’s Al Khalij Commercial Bank and Commercial Bank of Qatar as lead arrangers and Western heavyweight Standard Chartered. “The Gulf banks have not faced the same regulatory and capital constraints that European banks have faced, so they are able to provide liquidity to African banks,” Patrick Mweheire, CEO of Stanbic Bank (Uganda) told Reuters.

A number of years back, Gulf lenders mainly took part as junior partners in global syndicated loans. They seldom got engaged in important management parts in syndications. But in the past half-a-dozen months, many transactions have hinted that the whole scenario was being transformed.

Last November, ICBC Financial Leasing, a 100 percent owned unit of Industrial and Commercial Bank of China (ICBC), raised a $500 million, three-year loan. Lo and behold, eight of the 10 banks involved in the deal came from the Gulf region.

It is also understood that South African bank, FirstRand, raised $235 million in a two-year loan last week. However, the whole transaction was syndicated to nine Gulf lenders.