Regional Awards for Excellence 2012: Africa

Best Bank: Ecobank Best Investment Bank: Deutsche Bank Best Debt House: Standard Bank Best Equity House: Renaissance Capital Best M&A House: Goldman Sachs Best Flow House: Standard Chartered Best Project Finance House: Standard Bank Best Cash Management House: Standard Chartered Best Risk Adviser: Standard Bank  All regions and countries Africa country awards Full results index

Ecobank is small compared with rivals such as Standard Bank and the African operations of Standard Chartered, but it boasts a large presence in the fast-growing and smaller markets in sub-Saharan Africa.

Best Bank

The continent’s original pan-African group is now the largest financial institution in the continent by geographical outreach, operating in 33 economies. The quality of its management, strategic outlook and growing profitability in a continent with strong structural growth prospects stand the institution in good stead.

Arnold Ekpe, CEO, Ecobank: oversaw a transformational year for the group

In recent years, Ecobank has expanded its franchise in a bid to establish a universal banking presence, offering retail, corporate and, to a lesser extent, investment banking services. But the past year might prove transformational for the group, with two big acquisitions in Nigeria and Ghana that have propelled it to a top-tier ranking in both countries.

Earlier this year, Ecobank completed its 100% acquisition of Oceanic Bank in Nigeria, in a $335 million deal that transforms the lender into the fifth-largest institution by assets in Africa’s most populous nation. Before the acquisition, Ecobank’s Nigerian operation had been a laggard in its pan-African portfolio, posting a $2 million net loss in the 2010 fiscal year, from its exposure to bad debts.

The jury is out on whether or not the Oceanic acquisition – a hugely complex transaction with capital-raising implications – will ultimately deliver value for shareholders, especially considering the strength of competition from global and local banks in the country. However, a strong strategic presence in sub-Saharan Africa’s second-largest economy is critical for any pan-African bank and the merged entity should benefit from economies of scale to ramp up its retail and corporate loan book while reducing its cost of funding.

In January, Ecobank concluded its $135 million acquisition of Ghana’s Trust Bank to become the largest bank by assets in the fast-growing economy.

In the 2011 fiscal year, Ecobank posted a 57% jump in net income to $207 million. As long as the bank keeps a lid on its costs, pent-up credit demand and growing cross-border trade should continue to buttress its top line. What’s more, Ecobank is close to holding $20 billion of assets, thus reaching a level that it reckons will allow economies of scale to kick in to boost its efficiency and cross-selling of products and services.

Best Investment Bank

In investment banking, notwithstanding the relative decoupling of Africa’s real economy, the problems in Athens over the past year has managed to infect the continent’s capital markets. Nevertheless, despite febrile market sentiment, capital outflows and modest deal flow, global investment banks have stepped up their presence in the region, eyeing lucrative opportunities in the years ahead if Africa’s macroeconomic outperformance translates into capital market gains.

Over the past year, Deutsche Bank has quietly but surely snapped up lucrative business in the teeth of surprisingly strong competition from local and global houses. Deutsche was the top investment bank in Africa by fee income in the awards period, generating $45.3 million with a 15.5% market share, comfortably ahead of Goldman Sachs’s $17.2 million.

Deutsche advised on some 17 M&A deals during the award period and played a key role as joint financial adviser in the largest African M&A deal over the past year: Wal-Mart’s epoch-making R16.5 billion ($1.96 billion) acquisition of South African retailer Massmart, which was finally wrapped up in May 2011.

Deutsche Bank did landmark ECM trades for South African issuers, including the largest block trade, at R2 billion, for shipping and freight firm Grindrod, and the largest accelerated bookbuild as the sole bookrunner for a R1.8 billion capital increase for Growthpoint Properties, the largest property firm on the Johannesburg Stock Exchange.

It was also active in the export credit market, arranging over €380 million of financing for Angolan projects alone in 2011, for example.

Deutsche boasts a 200-plus team in South Africa and a more modest presence in Nigeria. Crucially, it has not cut back on staff in recent years. It has also expanded its commodities capabilities, recently winning its first oil-hedging mandate from the Ghanaian government. The bank also deserves credit in its capacity as the top international investment bank in Nigeria by fee income, and second, overall, during the award period.

Notable hits for Deutsche include working as lead financial adviser on Nigeria’s banking sector clean-up mission as well as a bookrunner on the sovereign Eurobond. Still, the battle between investment banks in Africa will only get fiercer, so Deutsche cannot afford to rest on its laurels.

Florian von Hartig, Standard Bank: the bank stands out for geographical spread

Best Debt House

In debt capital markets, Standard Bank is arguably the biggest player in a small group of competitors. What makes the bank stand out above its competitors in debt, however, is its geographical spread – with a big share in South Africa and activity in the smaller markets – as well as its ability to print deals in local currencies as well as dollars.

This is helped by the combination of a decent-sized team in London led by Florian von Hartig, formerly head of CEEMEA debt capital markets at JPMorgan, and DCM bankers in African cities including Johannesburg, Lagos and Nairobi.

Standard Bank’s deals on the DCM side this year include sovereign Eurobonds for the governments of Senegal and Namibia. The latter was a debut issuer in the Eurobond market, and the deal was one of Euromoney’s deals of the year for 2011. Standard Bank was also joint lead manager on the $500 million five-year Eurobond for Afreximbank in July 2011.

In local currency, Standard Bank’s deals included a N35 billion ($214.5 million) lower tier 2 note for UBA in Nigeria, one of the country’s biggest banks. It was also joint issuing house, arranger and bookrunner on the N11.9 billion three-year bond issue for cement firm Lafarge Wapco.

Standard Bank also managed local-currency bond issuance in South Africa for firms including Toyota, Goldman Sachs and Mercedes-Benz. It raised bond funding too, for issuers including Kenya-based housing finance firm Shelter Afrique and the Mozambique arm of microfinance outfit Banco ProCredit, as well as Petromoc, the state-owned energy firm in Mozambique.

Best Equity House

In equity capital markets, issuance in the primary market was roughly half of the previous period. Deutsche Bank performed very well in South Africa. But Renaissance Capital stands out for its ability to make equity deals happen for companies in countries most other bankers are ignoring, across sectors and in local as well as international markets.

As with Standard Bank’s debt franchise, it helps that Rencap has bankers, traders and salespeople who are not just in global centres such as London, New York or Hong Kong but also on the ground in Africa – and not just in Johannesburg. Rencap has deployed internationally trained bankers in such cities as Accra, Harare, Lagos, Lusaka and Nairobi.

A good example is last June’s $55 million capital raising for Zambian agribusiness Zambeef, which included the first Zambian listing in London on the junior market AIM. Rencap was also bookrunner for the first Zambia-focused mining company to list locally, First Quantum Minerals, in an $18 million deal, and it was sole bookrunner on the $70 million rights issue for Zambian Breweries.

In Toronto, it was sole bookrunner on the C$53.5 million ($52.3 million) Toronto IPO of Republic of Congo-focused potash producer Elemental Minerals. The bank further raised $64 million from institutional investors in an accelerated bookbuild for Sundance Resources, an Australian iron-ore miner focused on west central Africa. Back in local markets, Rencap was sole bookrunner and transaction adviser on its second IPO in the Rwandan stock market – this time for Bank of Kigali, a $63 million offering.

Rencap’s equity franchise in Africa stands to benefit from its hiring, this spring, of one of Morgan Stanley’s top investment bankers for the region, Ronnie Golan.

Best M&A House

In M&A deals that were completed during the period, Goldman Sachs has a clear lead in the Dealogic league table, with roughly a third more volume than its nearest competitor, Deutsche Bank. Goldman Sachs can also claim a variety of deals across the continent.

One of the biggest deals in the period was the $10.7 billion takeover of Australian brewer Foster’s by SABMiller. Goldman Sachs advised Foster’s. Another of the biggest deals of the year was the $5 billion sale by the Oppenheimer family of a 40% stake in diamond firm De Beers. Goldman Sachs advised the buyer, London and Johannesburg-listed miner Anglo American.

Also in South Africa, Goldman Sachs advised Massmart on the Wal-Mart deal. Goldman Sachs furthermore advised on the $1.3 billion acquisition of the V&A waterfront park in Cape Town by the South African Public Investment Corporation and Growthpoint. It also advised US pigment firm Tronnox on its $3.4 billion acquisition of the mineral sands business of South Africa’s Exxaro.

In deals more focused on the rest of Africa, Goldman Sachs advised Chinese minerals firm Jinchuan on its takeover of Africa-focused miner Metorex. The $1.4 billion deal will create synergies with the two firms’ existing operations in the Democratic Republic of Congo, South Africa and Zambia.

In oil and gas, Goldman Sachs advised the China National Offshore Oil Corporation on its $1.5 billion acquisition of Tullow Oil’s Ugandan exploration assets. In Nigeria, Goldman Sachs advised Telkom on its sale of its Nigerian affiliate to the Nigerian unit of UK telecoms infrastructure firm Helios.

Best Project Finance House

This year’s race for the best project finance house in Africa was a close call between Standard Bank and Standard Chartered. Although Standard Chartered received the accolade over the previous three years, it is Standard Bank that has gained the top spot this year.

As examples of the extent of its work, Standard Bank raised financings for copper mines in Botswana and Zambia, and $96.5 million for an iron-ore mine in Sierra Leone, as well as financing for a mineral sands project in Kenya. It also raised $250 million for road projects in Tanzania, R350 million in subordinated debt for a gas pipeline in Mozambique, and financing for electricity transmission lines and a hydroelectric plant in Angola.

One of its most noteworthy transactions was the financing of a state-of-the-art sugar refinery complex in Lagos, Nigeria. The deal comprised a 750,000 million tonnes per annum sugar refinery plant, a 65,000-tonne storage facility and a 30MW gas-power plant for a total project cost of $229 million. Stanbic IBTC Bank (the Nigerian affiliate of Standard Bank) was the structuring and modelling bank and joint mandated lead arranger with Standard Bank. Stanbic IBTC also provided carbon-credit advice to the company.

Best Flow House

Standard Chartered, however, continues to be the pre-eminent flow house in Africa, particularly outside South Africa, in these otherwise illiquid frontier markets. The range of African currencies Standard Chartered trades is almost unparalleled, and in many local currencies it has a stubbornly dominant market share.

In rates, Standard Chartered has bond-trading books and traders based onshore in Botswana, Ghana, Kenya, Nigeria, South Africa, Tanzania, Uganda and Zambia. Over the past year, Standard Chartered has introduced more complex flow products in Africa too, including in commodities such as oil, corn, wheat, soya, cotton and sugar.

Standard Chartered bought Barclays’ Africa custody business in 2010 and has since expanded the business organically to Nigeria and South Africa. Standard Chartered also provides some of the best and most extensive research on African markets.

Best Risk Adviser

Standard Bank impresses most for the work it can boast as a risk adviser in Africa. Its main hubs in this business are its home base, South Africa, which has relatively developed financial markets, and Nigeria, where Stanbic IBTC is one of the country’s foremost investment banks and an innovative derivatives provider.

As one example of its work in this area, Standard Bank helped a large distressed South African corporate novate unwind and re-hedge a large amount of credit and legal risk within a 48-hour period. The client was able to unwind its position at favourable rates, avoid default and re-hedge in a new funding and capital structure.

Best Cash Management House

Standard Chartered’s cash management operations in Africa have had a very strong year. Revenue has grown by 28% and transaction volume by 41%. Client operating account balances were up 32% and over 350 new mandates were won.

For example, the bank assisted Ugandan power distribution firm UMEME with improvements regarding client receipts – previously clients had been having their electricity disconnected erroneously. Standard Chartered was also mandated by SABMiller to provide real-time visibility of account balances, receipts and payments across multiple countries on the continent.