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New SA political leadership is unclogging deals, Nedbank CEO says

Mar 26 2018 07:45
Donal Griffin and Renee Bonorchis, Bloomberg

London - Investments in South Africa’s infrastructure that couldn’t be completed last year because of political uncertainty are among deals that are now on the cusp of getting done, said the chief executive officer of Nedbank Group.

Mike Brown’s confidence reflects improving sentiment since Cyril Ramaphosa replaced the embattled Jacob Zuma as the country’s president last month. The government is trying to resolve policy uncertainty in South Africa’s crucial mining industry while getting renewable energy projects underway again.

“The front-end of those transactions would be infrastructure-type transactions, in particular, in South Africa, the renewable-energy deals,” Brown, whose bank is controlled by Old Mutual, said in an interview in London on Thursday.

Nedbank plans to “work alongside certain state-owned enterprises, that have previously been starved of funding, to rehabilitate them,” he said, emphasising cash-strapped power utility Eskom Holdings and loss-making South African Airways.

Brown has been part of the CEO Initiative, which was started to help the government rescue the economy after Zuma fired his finance minister at the end of 2015.

With Ramaphosa, “we are significantly more confident about the future of South Africa,” Brown said. “The fact that we have new leadership doesn’t mean the challenges have gone away, obviously, but I think we’re much more capable of dealing with them.”

Here’s more of what Brown had to say:

On land reform:

“I still have a large amount of confidence in the ability of the leadership in government, working alongside civil society and business, to craft a solution.”

We would absolutely expect that all of the banks, as interested parties, and the banking association, plus many many other interested parties, would be part of this process.”

On Eskom

“We believe that the new board of Eskom is a very credible board and is the start of a process of fixing Eskom, starting with Eskom’s governance.”

Shortly after the appointment of the new board, Eskom came to a banking consortium and asked for a R20bn loan. Nedbank, some of the other South African banks and the international banks, all provided that loan to Eskom. We would not have done that without the change in leadership”

On investment banking

“We’ve seen a huge amount of interest in South African financial markets in the last two to three months. And on the back of that, we’d expect a pick-up in M&A activity"

There’ll be a lot of work being done by many bankers on what’s the longer-term future of the state-owned enterprises."

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nedbank  |  mike brown
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