HomeIndustry SectorsFinance and PolicyEnergy infrastructure: S.African and Chinese Banks partner to raise $697m

Energy infrastructure: S.African and Chinese Banks partner to raise $697m

South Africa and China continue to work together to develop the Continent’s energy sector

On Friday, South Africa’s largest operating financial institution, Standard Bank, announced a five-year partnership with the Industrial and Commercial Bank of China (ICBC) to raise ZAR10 billion ($697 million) to support the development of South Africa’s power generation infrastructure.

The announcement was made by Standard Bank Group Chief Executive Sim Tshabalala, following the signing of a collaboration agreement between ICBC and Standard Bank in the presence of President Xi Jinping of China and South Africa’s President Jacob Zuma at the FOCAC Heads of Summit in Sandton, Johannesburg, the Bank said in a statement.

Energy infrastructure: strategic partnerships

Standard Bank will assume the role as arranging and structuring adviser, and will support the ICBC in raising the committed funds.

Tshabalala added that the joint partnership will support up to 100 new infrastructure and industrial projects across the continent.

The Bank added that these projects will include resources and transportation, to electricity and telecommunications, to manufacturing and industrial parks.

Tshabalala said: “Strategic cooperation between ICBC and Standard Bank has enabled us to arrange more than $7 billion in loans to African countries and to complete over $14 billion of transactions that have brought equity and debt capital from Chinese corporations and financial institutions to Africa.”

Driving developments

The long-term partnership has enabled the development of various infrastructure projects in Africa, to quote Standard Bank in a company statement, these include:

  • Standard Bank, ICBC and China Development Bank are co-financing the Kabompo hydro project in Zambia, where Sinohydro has been appointed as the civil engineering contractor.
  • Standard Bank and ICBC are joint lead arrangers, underwriters and book runners of $1 billion syndicated loan facility to Angolan state oil company Sonangol.
  • ICBC and Standard Bank have jointly provided Hisense with a ZAR1.1 billion ($70 million) working capital facility – the largest working capital funding package provided to any Chinese entity secured by an ICBC guarantee.
  • Standard Bank and ICBC have jointly re-financed the debt of Samancor Chrome by way of two corporate facilities amounting to ZAR3 billion ($209 million) – this collaboration is the largest single distribution that Standard Bank has undertaken with the ICBC to date.

Commending China’s achievements, Tshabalala said: “The rise of China to become the industrial powerhouse of the world has been the great economic miracle of the last 30 years. With China’s assistance, Africa’s economic take-off is now well underway.

“It’s a great time to be investing and working in Africa. With our deep Chinese and African roots, local knowledge and global reach, ICBC and Standard Bank are here to do everything we can to ensure that your companies succeed.”

He added: “[…] [Africa] has been recognised for what it really is: A continent that is at once very dynamic and very diverse – a continent of over 50 countries, each with a distinctive set of challenges and opportunities. For this reason, investors and entrepreneurs in Africa need to build up strong local relationships and to develop detailed local knowledge.”

China continues to play key role

The chief executive emphasised the key role that China has played in developing many African countries and said that it continues to have a place in countries such as Ethiopia and Mozambique, which he claims to be among the fastest growing in the world.

He said that ICBC had identified Africa as an important growth market long before it was fashionable for global banks to do so.

“ICBC recognised that its own expansion into the continent would be best served by creating a strategic partnership with a large and well-established African financial services group.

He concluded: “So the largest bank in the world teamed up with the largest bank in Africa in 2009, when ICBC bought a 20% stake in the Standard Bank Group, becoming our single largest shareholder.”

Ashley Theron
Ashley Theron-Ord is based in Cape Town, South Africa at Clarion Events-Africa. She is the Senior Content Producer across media brands including ESI Africa, Smart Energy International, Power Engineering International and Mining Review Africa.