Holistic approach needed for capital raising for African resources projects

first_imgAustralian backing for financing and developing mineral resources projects in Africa should be viewed as an holistic activity with equity and other forms of financing needing to be raised together, according to one of the largest active banking groups in Africa. Addressing the first day in Perth of the three day Paydirt 2014 Africa Down Under Conference, Nedbank Capital’s Head of Resources, Mark Tyler, said funding African resources projects was not very different from other parts of the world. However, it was a region that presented slightly tougher conditions in raising equity. “Project funding there needs to be viewed as a mixture of private equity, public equity, structured debt and bank debt – a holistic approach,” Tyler said. “This combination is optimal to lock in total project funding.”“Africa has its issues in political risk, operational problems and lack of infrastructure but is has positives including being substantially under-explored, an inexpensive but mining experienced labour force and support from world institutions.”“However, debt finance is more readily available through Australian, European and African commercial banks, multilateral and bilateral financing institutions and export finance agencies.”The Nedbank executive pointed to the current equity environment, however, suggesting that while markets may be tougher than the “golden years”, that environment may now be the “new normal”.On capital raising, Tyler said while there had been a great deal of money raised in recent years for African mining projects, much of this was by large multi-national entities – but in the past 12 months or so, the transactional values had tailed off for all sectors.Total global debt mining markets had collapsed from 2011 highs to substantially much lower in 2014.“When times are good, amounts raised for Africa rise rapidly but conversely, drop much faster than the averages when the downturns hit – particularly since 2010.”last_img