Absa Group is exploring plans to convert its Nigerian representative office into a full merchant bank, as the South African lender seeks to expand its African presence and reduce reliance on its three largest markets.
South Africa’s third-biggest bank aims to diversify earnings beyond South Africa, Kenya and Ghana, which together contributed more than 80% of group profit in the six months to June. A merchant banking licence would enable Absa to take corporate deposits and offer loans, investment banking and project finance.
“We’ve got a rep office in Nigeria, which we are exploring the possibilities of converting into a merchant banking license,” Chief Executive Officer Kenny Fihla told Bloomberg TV.
The move would put Absa in direct competition with larger South African rivals Standard Bank Group and FirstRand, as well as leading Nigerian lenders Access Holdings, Zenith Bank and First Bank of Nigeria.
Fihla stressed the need for broader diversification: “The dependence on two or three big markets is fine if you’ve got tailwinds, but as soon as you experience some headwinds, you are vulnerable to massive shocks. Which is why then the primary thrust of our strategy is to diversify our revenue streams, both in terms of geographies, in terms of business lines, but also in terms of client segments.”
Absa currently operates in Nigeria through its representative office and two specialised subsidiaries. Absa Capital Markets Nigeria Limited, an Issuing House, is led by Acting CEO Bamidele Sadiq Abu, while Absa Securities Nigeria Limited, a Broker/Dealer, is led by Managing Director Akinkunmi Majaro.
The group already holds a strong track record in Nigeria’s natural resources and energy sector. It acted as funding partner to Heirs Holdings and Transcorp on their USD 1.1 billion acquisition of OML 17 — the largest oil and gas M&A deal in Africa in recent times. Other key transactions include financing for NLNG Train 7, joint-venture funding for SPDC, Eni, Total, NNPC and Chevron across onshore and offshore assets, a reserve-based lending facility for Prime Oil & Gas’s Nigerian offshore assets, and support for the landmark Mozambique LNG project.
In capital markets, the Absa Nigeria team served as Joint Lead Issuing House on the Dangote Cement Plc bond issue, allocating NGN 116 billion across 5-, 7- and 10-year fixed-rate tranches — the largest corporate bond offering in the history of the Nigerian capital markets.
Posts
0 Comments