Rand Merchant Bank (RMB) Botswana recently revealed that it is available to provide multi million Pula funding to the country’s resource sector companies in both coal and diamond projects. Speaking at the Capital Resources Botswana Resources Sector Conference during the week, RMB Business Development Director ÔÇôResources, Henk de Hoop, said RMB is ready and willing to provide funding.
“FNB and RMB offer assistance to companies through branches in London and India, via representative offices in Dubai and Shanghai, and through a co-operation agreement with China Construction Bank,” said de Hoop.
He also pointed out that FNB and RMB are well positioned to assist with trade and investment flows between Europe, the Middle East or Asia and Africa. He highlighted that RMB operates a mining focused private equity business, RMB Resources, which is based in Australia with offices in the US and the UK. Regarding funding, de Hoop said the bank considers equity capital markets, traders and private equity. He added that on debt, they consider commercial banks, development finance institutions and also export credit agencies.
“There is a constrained funding environment and projects are more likely to require a phased approach. There are good projects with strong management which attract funding and we will engage with potential funders early in the process,” said de Hoop.
Regarding the resources sector performance, de Hoop said weak equity markets result in limited capital and low liquidity. He spoke of project funding impact which he said has increased equity cheque constraints for both big and small players. He also noted that there are fewer banks, smaller cheques, but more competition for high quality assets. de Hoop said the revenue line outlook is more uncertain on commodities that can be hedged and added that projects are likely to require a more phased approach. He said the impact was increased stress testing of project risk, forecast ramp-up and costs.
“We provide a full spectrum of investment banking services to all industries, making us one of the leading financial and business partners on the continent,” said de Hoop.
He gave an example of the coal case study on the Greenfileds project, which is a low cost producer with simple processing technology and a strong project management team. He said the coal project has managed to raise equity in a tough market and now has reasonable gearing. He added that RMB has geared up reasonable cash flows and has strong, experienced management who have a history of generating cash flows. He said RMB is a large corporate with access to capital, clear, achievable and detailed expansion plans and also flexibility in capital expenditure.