South Africa -
ROSY FUTURE
8
mini special
WHAT'S NewS Issue 8 August/September 1997
Since the beginning of the decade, RI's geographical
attention has shifted to sub-Saharan Africa, and specifically
to forging commercial relationships with what is arguably
the country of the 1990s - South Africa. Rl is on the spot as
the 'new' country continues to experience what
international eyes perceive positively as 'the change'. Our
own representative office in Southern Africa gives What's
NewS an insight into doing business in the most politically-
correct country in the world.
South African team: Paco den Doop (right), Carol Harding,
Paul Cockroft and Ruby Chatham (left).
It all began six years ago when
Paco den Doop, now general
manager in Johannesburg,
joined Rabobank. From
September 1991 he began
developing business in
Southern Africa while still
based in Utrecht. By 1996,
feasibility studies suggested it
was time to actually be on the
spot. 'Understandably, the
elections focused an
overwhelming amount of
foreign interest on the area,'
Den Doop confirms. 'To stay
competitive we simply had to
have on-site representation.'
And a humble beginning it
was in January last year, when
Den Doop and a secretary,
kick started Jo'burg's
representative office. Now,
some 18 months later, the
Southern African team has
grown to four. Other team
members are credit analyst
Paul Cockroft, corporate and
trade finance banker Carol
Harding and new secretary
Ruby Chatham. 'With a Scot,
a Dutchman, a Zimbabwean
and a South African, we really
are a small, dynamic and
cosmopolitan family,' Den
Doop grins as he described the
energetic team essential to
tackle what has developed into
an extremely competitive
market.
COMPETITIVE EDGE
According to all team
members, political change has
really increased competition in
Southern Africa. 'We now have
more than 65 foreign banks
represented here operating
alongside 50 local banks,' says
Den Doop, 'and all are mixed
together vying for a slice of the
same cake. But comparatively
speaking, as the cake is only
equal to around 35 percent of
the entire Dutch economy, it
can be a pretty cut-throat
market. It's becoming more
difficult day by day to find the
right cliënt with the right
return on solvency. But as
Rabobank, we have a few
tricks up our sleeve which can
really make the difference.'
BIG DEAL
The largest and most recent of
Rabobank's Southern African
deals is a five year, ZAR 250
million term loan facility
arranged for the Industrial
Development Corporation
(1DC). While our rep. office
remains the sole funder, it was
syndicated to four other locally
represented international
banks who will guarantee the
loan, Commerz Bank, ABN
Amro, ING and NatWest. The
office intends to fund the
facility against an annual
interest payment, whereas IDC
will pay the same interest rate
on a semi-annual basis. 'As a
result,' according to Den
Doop, 'we have half the
annual interest available for a
period of six months to
generate extra revenue. The
deal is a real team effort for
Rabobank involving parties
from South Africa, London,
Paris and Utrecht. It's a first
Eurobond issue in the name of
Rabobank for IDC - our
triple-A rating giving us the
competitive edge in the
market.' The IDC deal was
booked through our Paris
office with treasury manager
Dennis McHugh providing
consultancy on structuring the
arrangement. Signing took
place in London on 7 August
and included other major
players - London based Robert
Halcrow and Hilary Maccabe
of syndications, who were
involved in providing
syndication risk assessment
and support. Completing the
networking team was Tjeerd
de Vries, Utrecht's treasury
manager and Theo Hendriks
and Patrick Mitchell of
funding and structures desk.
SWEETSUCCESS
For South Africa, this deal was
the second similar loan
arranged, the first one being
for Outspan International Ltd.,
a household name in South
African citrus export. 'We
talked to Outspan who had
plans to expand their harbour
facilities in Durban,' continues
Den Doop, 'by March of this
year we closed the deal. It was
a modest ZAR 10 million loan
- but amount aside, through
Outspan we discovered our,
RI's, power in attracting
Eurobond funding - from
there we were able to go for
the big stuff and approach the
IDC.'
EXCITING TIMES
South African born Carol
Harding, corporate and trade
finance banker, has been part
of the team for just over a year.
For her, recent business is an
exciting taste of things to
come. 'Commercially, since the
elections we've not looked
back. It's really a dynamic time
to be doing business here - the
IDC deal shows how active the
syndications market has
become. In the bad old days
(read pre-election), South
African banks could only
borrow offshore and then only
for periods of three to six
months - maximum. Since the
election, South African
corporates have flooded into
the international financial
markets with widespread
acceptance. South African
borrowers now have access to
offshore money for periods of
up to five years; previously this
was unheard of.' A recent
example of the acceptability of
South African risk is the
launch of a three year facility
for the South African Reserve
Bank who were looking to
raise USD 1.5 billion offshore.
The syndication closed at USE«|
1.75 billion, after being
subscribed for an amount of
USD 2 billion. Keeping its
finger on the pulse, Rabobank
has a stake of USD 44 million.
