2 April 2013
Standard Bank Group signs R20bn finance deal with ICBC for renewable energy projects
Standard Bank Group has signed a R20-billion funding support agreement for renewable
energy projects in South Africa with the Industrial and Commercial Bank of China
ICBC is Standard Bank Group's single largest shareholder with which it has a 20%
shareholding. The deal is innovatively structured to provide the funding out of
rand money accruing to ICBC by virtue of that shareholding.
The agreement was signed by ICBC Chairman Jiang Jianqing and Standard Bank Group
Joint Chief Executive Ben Kruger.
"This is an extremely significant transaction. It highlights Standard Bank's commitment
to the renewable energy sector and demonstrates the strength of the partnership
between Standard Bank and ICBC, the world's largest bank," says Mr Kruger.
"ICBC's aim is to promote the use of renewable energy in South Africa in support
of the South African government's renewable energy programme, and through this partnership,
to help save the environment. ICBC is also certainly interested in raising awareness
of the South African investment opportunity among Chinese suppliers as potential
sources of contracting capability. In addition, the objective of this partnership
is to facilitate the entry of investors into South Africa, and ICBC is excited about
the opportunity to co-lend into renewable energy with Standard Bank, ICBC's South
African strategic partner, through to 2025. ICBC sees itself as an important partner
of the South African government in its developmental ambitions," says Chairman Jiang.
"Standard Bank and ICBC will jointly provide debt financing on a project finance
basis to companies that are awarded Preferred Bidder status under the country's
Renewable Energy Independent Power Producer (IPP) Procurement Programme. This will
apply to projects where Standard Bank is or will be mandated as a lead arranger,"
says George Kotsovos, Head: Power and Infrastructure Finance at Standard Bank Group.
Standard Bank Group chose to take the lead in unlocking alternative sources of funding
for renewable energy projects as it has been one of the leading players in the bidding
process for renewable energy projects in both rounds of the bidding process so far.
In the first round of renewable IPPs that were finalised last year, Standard Bank
Group financed over R9-billion of debt funding, and in the second round it expects
to fund R6 billion.
Mr Kotsovos says the imminent third round is expected to illicit further significant
interest from developers and liquidity may soon become an issue, while ICBC's involvement
will help to reduce the pressure.
"It represents a further diversification of our sources of funding in addition to
domestic asset managers, who are currently keen to invest in such projects. The
renewable energy programme will require a large funding commitment and the more
sources of available capital the better. The flexibility that these long-term sources
of capital offer allows us to structure deals appropriately," said Mr Kotsovos.
For more on South Africa's renewable energy project, see www.energy.gov.za.
for information on Standard Bank Group's project finance capabilities.