Botswana based multi-national ecotourism company, Wilderness Safaris, operating nearly 40 luxury safari camps across eight African countries, has successfully raised a USD35 million bilateral loan for the purchase of a new ecotourism company in Kenya and for further expansion across Africa, according to Stanbic Bank Botswana.
“This structured, multi-currency loan facility was led by Stanbic Bank Botswana and the proceeds will be deployed over several years in multiple currencies thereby creating a natural hedge against foreign exchange risks. The transaction is one of the largest corporate deals in Botswana in 2016, and was fully funded by Stanbic Bank Botswana on a bilateral basis,” stated the bank.
Ordinarily commercial banks seldom offer long term funding as the associated risk tips the scale of the level of comfort that banks are willing to take. It seems however that banks have developed an increased appetite for long term funding in an attempt to widen their profit margins. In fact other financial outfits such as Development Finance Institutions (DFI) have observed that commercial banks are encroaching in their funding space with the view that they are now direct competitors.
The multi-currency loan facility offered by the bank exposes Wilderness Safari to currency fluctuations which could negatively impact its profit margin. Stanbic bank however mentioned that its loan facility has taken into consideration the foreign exchange risks. Stanbic commented with respect to foreign exchange earnings that “as Sole Arranger, Stanbic Bank Botswana has been able to provide Wilderness Safaris with bespoke funding solutions that will help protect it from currency volatility as well as generate future growth.”
Wilderness Safaris’ product is tailored largely to international customers, and defines its strategy as one that invests in luxury ecotourism opportunities in order to build sustainable conservation economies that combine conservation of Africa’s wildlife heritage with the sharing of benefits with rural communities. They indicated that they do this through working with governments and other stakeholders to entrench the true value of sustainable authentic ecotourism.
“In addition to reinvestment into flagship properties in Botswana and Namibia, the proceeds of this loan will be used for expansion across African markets such as Kenya and Rwanda,” Keith Vincent, Chief Executive, Wilderness Safaris was quoted saying. “This is in line with our group strategic vision, which is to invest in African tourism markets which offer authentic wildlife and safari experiences and where we feel our specific ecotourism model can have positive conservation and community impacts.”
Stanbic Bank admitted that leveraging a loan for deployment across many camps in different countries presents a unique set of complexities. This is especially so since the funding will be required at short notice for use across a number of countries in support of its business operations ÔÇô or to help address unexpected capital or liquidity events.