Standard Bank Group announced the successful completion of a secured syndicated loan of $250-million for Export Trading Group (ETG), one of Africa’s largest soft commodities companies.
The funding will be used primarily to finance ETG’s procurement of stock of agricultural commodities from traders and farmers across several countries and to help it expand further, particularly within west Africa which has been identified as a growth area for ETG.
ETG’s operations involve the production, processing, trading and distribution of agricultural commodities primarily in Sub-Saharan Africa and Asia, and the group is expected to increasingly play a leading role in ensuring regional and global food security. Founded as an agricultural marketing company in Kenya in 1967, ETG has grown into one of Africa’s largest integrated agricultural supply chain managers.
Standard Bank Group was the mandated lead arranger for the ETG transaction.
Standard Bank Group has a long standing relationship with ETG and this is one of several facilities that Standard Bank Group has arranged for ETG. In a previous transaction, Standard Bank Group was mandated lead arranger for various trade finance facilities of over $100-million to enable ETG to import and distribute soft commodities within east and southern Africa and Asia.
Standard Bank Group’s Head of Structured Trade Finance, Megan McDonald, says the loan demonstrates the group’s commitment to supporting growth in key commodity sectors such as agriculture, which is under the spotlight because of growing concerns about global food security.
She says the transaction with ETG attracted strong and broad-based interest from several local and international finance institutions and demonstrates Standard Bank Group’s ability to facilitate the raising of finance for large cross-border trade activities.
“As lead arranger we have again demonstrated the ability to mobilise funds from local and international financial institutions with whom we enjoy strong relationships. The combination of our experience in investment banking, on-the-ground presence and local knowledge of African markets allow us to successfully execute structured trade finance transactions.
“We believe that continued funding for the agriculture sector is needed to facilitate investment in long-term sustainable solutions to the food security challenges. We are delighted to assist ETG in their efforts to provide sustainable food supplies and in their successful expansion into new markets both in Africa and Asia,” says Ms McDonald.
Commenting on the loan facility, ETG Managing Director Ketan Patel says the transaction will allow ETG to build capacity and enhance its leading positions in several core product sectors as well as expand into new geographies.
“ETG is delighted with the successful completion of this financing, which will help us to grow our soft commodities trade across the African continent. We thank Standard Bank Group for their continued support,” says Mr Patel.
“The funding will provide ETG with the flexibility required to gain significant market share and increase profitability in the agri-commodities industry. Furthermore, this type of facility will enable ETG to deliver stock at short notice to its off-takers, while simplifying the flow from raw commodity inputs to final processed products, thereby fast tracking turnaround times. It will ensure that ETG has the relevant stock available for distribution all year round, which is crucial for ETG’s competitiveness.”
Ms McDonald says this transaction is also significant for Standard Bank Group as it adds to its growing share of the overall trade finance market in Africa. She says an important change in growing Standard Bank Group’s share of the general trade finance trade market in Africa is that global liquidity pressures have made the cost of funding for Standard Bank Group much more competitive.
“Standard Bank Group’s healthy balance sheet, depth of expertise and on-the ground presence in key African commodity markets has enabled us to continue to increase lending to transactions in key commodity sectors on the continent.
“As the largest bank in Africa, we expect to continue playing a leading role in trade finance and strengthening trade not only within the continent, but between African and other emerging markets.”