Published: November 11, 2011
African bank’s deal with DFIs continues to diversify its funding mix.
For banks in need of fresh capital, variety is valuable. Oragroup, a commercial banking business in West and Central Africa, knows the worth well; hence its new deals to secure US$20mn from development finance institutions (DFIs).
The money – US$7mn from Belgium’s BIO and US$13mn from France’s PROPARCO – comes as part of Oragroup’s drive to diversify its shareholders. Majority owned by private equity firm Emerging Capital Partners, the group raised more than US$85mn during 2011 through debt and equity deals with new local, regional and international investors.
During the next two years, it expects to raise a further US$200mn to fund acquisitions.
Oragroup already operates its Orabank business in Togo, Benin, Gabon, Chad, Mauritania and Guinea. Managing director Patrick Mestrallet wants the business to grow in those markets and hopes to add Cameroon, Côte d’Ivoire and Senegal to the list – regulators are likely to increase the minimum capital requirements for banks across West and Central Africa, he tells EMEA Finance, and so takeover targets should be rife.
That’s what friends are for
Mestrallet sees two benefits in having grown Oragroup’s shareholder base during the past year.
“First of all, the group wants to make sure that further growth opportunities will be funded smoothly,” he says. “Secondly, each category of investor brings one specific feature. The DFIs bring the high governance standards which are essential in the sector while the private investors tend to reinforce the local anchorage of the banks in its markets.”
Expect the bank to welcome other, more varied, partners soon. Mestrallet says the bank will focus on tapping local private and institutional investors for whom the impact of the global downturn has been limited. But he is also keen to draw in financiers from further afield.
“Given the current global financial crisis, we would not be surprised if we also attract some international investors,” he says. “We believe that any investor with a long-term investment horizon should consider seriously the African banking market.”