Many people do not know that Stanbic IBTC Capital is one of the leading investment banks that support real estate development in Nigeria. It is one of the big financiers of that sector. In fact, going by industry standards it is one of the banks that fund all the mega Real Estate projects. We can reveal that to you authoritatively.
That was why a few weeks ago, Stanbic IBTC Capital was honoured by the Lagos Chapter of the Nigerian Institution of Estate Surveyors & Valuers. It was honoured for its heavy involvement in Real Estate Finance.
City People can reveal some of the landmark developments the bank has been involved in, over the past 24 months. They include: (1.) Maryland Mall by Purple Capital (2.) Refinancing facility for Landmark Office Towers (3.) Novare Mall Sangotedo (4.) Wings Tower, Mbadiwe, VI (5.) Refinancing of Heritage Place, Ikoyi and (6.) the Restructuring of Temple road office building, Ikoyi.
The above is only a summary of some the real estate finance activities/ deals in the 24 months in Lagos. Aggregate debt funding is circa $150m (over $150bn in direct debt funding to the real estate sector).
In addition, Stanbic IBTC Capital are a leading provider of mortgage finance loans in the country. This can be easily verified with NMRC which was set up to refinance mortgage loans and provide additional liquidity within the space.
To enable the bank do this, it has set up a formidable Real estate Finance team that advises on structured end-to-end financing solutions for the development of real estate projects to Corporate, Government and Institutional Clients across West Africa. The funding solutions incorporate multi-currency debt, equity and mezzanine finance initiatives which will provide medium to long term financing and cut across all real estate sectors: commercial, retail, office and residential as well as public real estate infrastructures such as hospitals and schools.
Stanbic IBTC Capital Real estate finance team is uniquely positioned to advise clients on securing innovative and flexible financing solutions, whilst mitigating financial and market risks. The Real Estate Finance team has been involved in arranging the funding of landmark projects such as Ikeja Mall, Polo Park Mall, Enugu; Accra Mall, Ghana and ICON Towers, Ghana.
The banks Real Estate Finance team provides advisory solutions including (1) Debt arranging (2) Debt finance – Mezzanine finance (3) Equity investments (4) Mezzanine equity (5) Joint Ventures.
Advisory services: Financial advisory service, Optimal capital structuring, Fundraising support.
The CEO of Stanbic IBTC Capital, Funso Akere recently told Businessday Newspaper why Stanbic IBTC Capital is best positioned to serve its clients better and drive Nigeria’s growth agenda, especially in the real estate sector.
He explained that investment banks in Nigeria specialise in the provision of advisory, capital markets and financing services to corporate and government entities. “Most investment banking transactions in Nigeria are under the purview of the Securities & Exchange Commission, which is the apex regulator of the Nigerian capital markets. The volume and value of transactions undertaken yearly are largely influenced by clients’ growth plans and investor sentiment, which are both positively correlated with political stability, economic activity, and a stable foreign exchange market”.
“Sector themes also play a big role in driving investment banking activity such as the privatisation drive in the early 2000s, the banking sector recapitalisation in 2004/2005, the insurance sector recapitalisation in 2007, the opening up of the domestic debt capital markets to state governments and corporate issuers in 2009/2010 as a result of tax waivers, the divestments of assets by international oil companies in 2011/2012, the power sector privatisation in 2013 and the establishment of FMDQ in 2014″.
He says Investment Banking in Nigeria is very competitive, with firms competing on heritage, breadth of offering, sector and product expertise, talent and connectivity. On large transactions, it is common to see a mix of “briefcase” global investment banks, regional/global investment banks with a strong local presence, domestic investment banks and boutiques, etc., competing for available roles”.
He was asked to give an insight into how Stanbic IBTC Capital operates.
He explained that Stanbic IBTC Capital as the leading investment banking institution in Nigeria, it offers a complete package of innovative advisory, capital raising and debt structuring solutions to a diversified client base that includes leading local corporates, multinationals and government entities operating in Nigeria”.
“We are a wholly owned subsidiary of Stanbic IBTC Holdings Plc (“Stanbic IBTC”), an end-to-end financial services company listed on The Nigerian Stock Exchange with a market capitalisation of about N492 billion as at 7 March 2019. Stanbic IBTC is a member of Standard Bank Group, Africa’s leading financial services group with a track record of over 150 years and a presence in 20 sub-Saharan Africa countries”.
“Our institution is built around serving our clients who operate across various sectors of the economy, so whatever affects our clients also affects us. I like to say that we are “joined at the hip” with our clients. The foreign exchange liquidity challenges in 2015 and 2016 on the back of the sharp drop in crude oil prices and the resultant recession negatively impacted most sectors. Our clients had to deal with issues such as the unavailability of raw materials, rising input costs, rising interest rates and a sharp drop in crude oil prices on one hand, and muted demand for their products as a result of the challenging economic and business environment on the other hand.”
“That notwithstanding, we had to put on our thinking hats and come up with innovative solutions to enable our clients continue to serve their customers and meet their financial targets, despite the challenging macro and business environment. We successfully completed about 50 transactions for clients in 2016 and 2017, some of which were undertaken to reduce overall financing costs by raising cheaper debt funding from the capital markets, or to reduce leverage by issuing equity to shareholders and using the proceeds to repay debt. For example we were sole Issuing House and Adviser to Rights Issues by Guinness Nigeria Plc (N40 billion) and Unilever Nigeria Plc (N59 billion) in 2017, the proceeds of which were largely used to repay debt.
It served as advisor to Dangote Cement Plc on a N50 billion Series 1 and 2 commercial paper issuance, the largest ever CP issuance by a Nigerian company, which was oversubscribed. How did Stanbic swing that?
He explained that “The Dangote Group is an extremely important client for Stanbic IBTC. “We acted as a Lead Issuing House to the first public equity offering by a Dangote Group subsidiary – the N54 billion Dangote Sugar Refinery Plc Initial Public Offering (“IPO”) in 2006, which was 140% subscribed. We were therefore extremely delighted to have acted as Sole Arranger and Dealer to the N50 billion Dangote Cement Plc Series 1 and 2 CP issuance in June 2018, which was the first public debt offering by a Dangote Group subsidiary and the debut issuance under Dangote Cement’s N150 billion CP Programme.
There was record participation from domestic institutional investors and high networth individuals, and the debut issuance was 112% subscribed. Whilst our distribution capabilities played an important role in positioning the transaction appropriately in the market, the overwhelming success of the transaction was evidence of strong investor confidence in Dangote Cement. We subsequently advised Dangote Cement on a N50 billion Series 3 and 4 CP issuance in August 2018, which recorded even greater success with a subscription level of 158%.
What is Stanbic IBTC Capital’s major strength in the industry? How does it handle competition he was asked.
“We have a number of unique strengths which sets us apart from the rest of the industry. Firstly, we are part of an end-to-end financial services group in Nigeria which has in its stable the leading pension fund administrator, the leading asset management firm, the leading stockbroking firm, the leading asset custodian business, the leading global markets business, a leading trade finance business, bank branches in every state in Nigeria, and other financial services solutions for various businesses and sectors.
Secondly, as a member of Standard Bank Group we are able to provide our clients with unique access to the 20 African countries which Standard Bank operates in, as well as key regional financial centres including London, Beijing, New York and Dubai. In addition, Standard Bank’s relationship with Industrial and Commercial Bank of China Limited (“ICBC”), the largest bank in the world by total assets, provides further international reach and strengthens our access to China which is a very important partner in trade, investment and infrastructure financing.
Lastly, we have a deep pool of talented individuals who have been with the organisation for a significant part of their professional careers and have developed deep sector insight, regulatory knowledge and execution expertise through working on complex and innovative investment banking transactions.
For example, I have been with Stanbic IBTC for 19 years, all of which have been spent in Investment Banking. Oyinda Akinyemi, who heads our Equity Capital Markets business has been with us for 18 years, while Tola Akinhanmi who heads our Real Estate Finance business has been with us for over 13 years. There are other members of my team who have spent over a decade with us. We are also able to leverage global resources within Standard Bank Group to provide bespoke financial and cross-border solutions to our clients, in line with international best practices.
What is the banks investment strategies and expectation for the future?
“We will continue to support our clients to achieve their growth aspirations. We expect an improvement in the macro and business environment in the coming months and this should drive investment banking activity more broadly. We should see an increase in mergers and acquisitions (“M&A”) and Capital Markets Activities driven largely by increased foreign investor interest in Nigeria, while the drive for growth in corporate earnings in 2019 should provide interesting opportunities for investment banking.
Stanbic IBTC Capital will continue to make the necessary investments in People and Technology, so we can provide our clients with innovative and best-in-class advice, execution excellence and thought leadership, and maintain our leadership position in investment banking in Nigeria.
I see Stanbic IBTC Capital as a catalyst for driving Nigeria’s growth agenda in the next 5 years, working with the private and public sectors on critical areas such as attracting FDI into Nigeria, raising equity and/or debt funding for expansion, energy and infrastructure financing, privatisation and real estate financing. We expect to connect Nigeria to the rest of the world and the rest of the world to Nigeria.