Standard Bank Group has advised on merger and acquisition deals worth more than R10-billion recently between Chinese companies and companies on the African continent. Two large deals were concluded in 2011, namely the US$1.3-billion Metorex sale to Jinchuan, which was completed on Monday and the 25% sale of the Shanduka Group to China Investment Corporate for R2-billion, completed in December.
In a deal concluded in late December 2011, Standard Bank Group acted as financial advisor on Shanduka's transaction with the China Investment Corporation (CIC). Shanduka Group, a South African black-owned and managed investment holding company and China Investment Corporation, the sovereign wealth fund of the People's Republic of China, concluded a transaction that has resulted in CIC acquiring a 25% shareholding in Shanduka Group for R2-billion.
Other China-Africa transactions where Standard Bank Group has been instrumentally involved in the recent period are: the Botswana Morupule B Power Project involving funding to the tune of $825 million with ICBC; a $400 million debt refinance with Equinox, a mining company with African operations; a $470 million export finance facility to the Ethiopian Hydro Power plant and; a US$5.5 billion financial advisory mandate to the Ghanaian Railway.
Brad Webber, Standard Bank Group's Co-head of Mergers and Acquisitions in South Africa, says: "The scale and pace of Chinese transactions on the continent is clearly picking up pace, especially in the area of mining and minerals. Standard Bank forecasts that merger and acquisition (M&A) activity between Africa and China will continue to grow and expand. Last year Standard Bank estimated that M&A activity between China and Africa increased by almost 90% from US$5bn in 2011. We expect this number to grow this year despite the slow down in the global economy."
The Meteorex sale represents the largest China-Africa deal on the African continent in 2011 and involved Chinese mining group Jinchuan acquiring 100% in the issued share capital of JSE-listed Metorex for US$1.3-billion. This follows several months of negotiation between the parties and efforts to obtain clearances from regulators in The Peoples Republic of China, South Africa, the Democratic Republic of the Congo (DRC) and Zambia.Metorex mines copper and cobalt assets in Zambia and the DRC.
Mr Webber says: "As part of the transaction, Metorex will be delisted from the JSE but will continue to operate as an entity within the Jinchaun Group. Jinchaun is a serious player in the copper space with significant resources to grow Metorex.
"We intend to continue our relationship with Metorex and at the same time further establish our links with Jinchaun.
"These deals highlight Standard Bank's unique position and exposure to the African and Chinese markets. We have a presence in 17 African countries and in 13 geographies outside of Africa. Standard Bank Group's customers benefit from our knowledge and expertise in emerging markets, particularly Africa and in the resources sector."
The world's largest bank, Industrial Commercial Bank of China (ICBC) is a 20% shareholder in Standard Bank Group and this strategic relationship provides Standard Bank Group with a strong partnership with one of the strongest players in the global economy.
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