Portfolio rebalancing ahead for Industrial Conglomerates and Industrial Service companies
Shake-ups are to be expected in 2023 as local and international players reorganise.
As business regains its footing in the aftermath of the pandemic, we are seeing heightened activity amongst industrial conglomerates and industrial services companies.
For many conglomerates, it’s still a time for de-gearing in terms of restructuring finance, disposing of non-core assets, and generally simplifying portfolios. In South Africa, we expect to see further consolidation in 2023 in line with the latest IMF growth forecasts.
For some industrial services companies, however, there is an intent to expand their ambit of operations to include new offerings by acquisition with the goal of becoming a ‘one-stop shop’ for their customers – and this is not restricted to local players. Over the past two years, there has been an uptick in interest from acquisitive international corporations wanting to establish their presence in South Africa’s developed market as a gateway to the continent.
This is where our M&A team plays an important and proactive role in surfacing opportunities to help our clients acquire, diversify, and divest assets.
Our funding teams via Corporate Financing Solutions, Leveraged Finance, Equity Finance and Investments teams are available to assist with your funding needs to ensure that you continue to focus on growing your business and achieving your strategic objectives.
Risk mitigation is a primary objective as we head into the new year, with power security and supply chain disruption topping the list.
On the back of the worst year of load shedding on record in the country, South African enterprises are ramping up investment in renewable power – and with the Government’s announcement in July 2022, the pathway for businesses to generate their own uncapped renewable energy at scale is now clear. Where previously there was a 100 megawatts threshold for private entities to self-generate power without requiring a NERSA licence to do so, that threshold has now been eliminated. The Government will also introduce new tax incentives for businesses and households to encourage them to invest in renewables.
This policy adjustment also makes provision for independent power generators to sell excess capacity back to Eskom – and besides providing relief from further electricity tariff hikes, investment in renewable energy may also reduce the coming financial burden of carbon tax legislation, once fully enacted.
Our proprietary PowerPulse platform assists South African corporations to de-risk commercial solar PV installations by providing an end-to-end technical, legal, and funding solution.
We are also assisting our clients to increase their stockholdings and/or augment credit lines with specialised supply chain finance – and we can provide help with diversifying supply chains through matchmaking to pre-vetted suppliers located in over 60 countries. We also assist in de-risking cross-border transactions with new trading partners with Letters of Credit and Bank Guarantees. Finally, our Trade team provides door-to-door shipping and logistics services to seamlessly insure, transport and clear goods.
Expanding into Africa
Africa’s fast-growing population and improving business conditions present attractive opportunities in an environment of slowing global growth. Simultaneously, greater innovation and investment from business is essential to bridge Africa’s unfulfilled demand for goods and services, address infrastructure gaps and create jobs.
Our on-the-ground presence in 20 African countries and deep sector knowledge, allows us to advise on how best to navigate local commercial and regulatory environments – while our relationship networks with investors, central banks, regulators, parastatals and government enable us to support our clients by facilitating meetings and liaising with role players.
Given our involvement in major infrastructure and commercial development initiatives across the continent, we’re also able to add real value to clients by sharing market intelligence on identifying local and regional opportunities and risks.
Meanwhile, our International team is at hand to advise on tax-efficient structures, whether located in China, Dubai, Mauritius or beyond.
Solving operational financial challenges
While Africa may present opportunities for growth, it’s not without its challenges – and heading into 2023, key concerns are forex liquidity and visibility across markets.
Our robust foreign currency reserves enable us to provide multi-currency finance (in local and hard currency) that can be allocated in different countries.
Meanwhile, our new TreasuryOnline platform affords clients greater levels of transparency and visibility than ever before. With TreasuryOnline you can view your cash position on all accounts held with us and with other banks, regardless of jurisdiction, from one secure platform. This streamlines financial management and allows for agile decision-making by eliminating the need for manual reconciliations. Additionally, you can manage forex, book forex deals, and make international payments on the system.
Leading with ESG-linked funding
For organisations committed to being positive corporate stewards, our pioneering sustainability-linked financing works to support environmental, social, and governance objectives.
In 2022, Standard Bank, acting as the sole arranger and sustainability structuring agent, raised R1.1 billion in the South African debt capital market via a sustainability-linked bond offering. Standard Bank also raised R1 billion in the South African loan market via a sustainability -linked term loan and sustainability-linked revolving credit facility for JSE-listed industrials firm Barloworld Limited (Barloworld).
Taking care of your employees
Employee wellness is key to building an engaged workforce. We provide a host of solutions to employers who wish to add value to their staff, they include discounted banking services, financial wellness programmes and our new BeWell platform that enables companies to provide affordable primary healthcare plans to staff who typically would not have access to that level of service.
Interested in learning more?
If you’d like to find out how we may assist your organisation to achieve its ambitions, contact us to start the conversation.