StanChart, BBK seek advisory role in KenGen deal

• The financing, which will be staggered over a six-year period, will be the biggest fundraising by a single company in corporate Kenya.
• Kengen plans to hire a financial advisor for two years, but the tenure of the contract is open for review.
• It says the advisor and arranger would “execute the financing plan to assist KenGen in identifying, designing, executing a suitable financing programme incorporating both debt and equity capital for its capacity expansion.”
• Some of the firms fitting this profile include Barclays Bank of Kenya, Standard Chartered Bank, and CFC Stanbic Bank, which are subsidiaries of large international banks that are strong in financial advisory and big-ticket lending.

Barclays Bank of Kenya (BBK) and Standard Chartered Bank are locked in a race to be adviser of power producer KenGen on how to secure Sh420 billion for new electricity plants.

The power firm plans to increase its capacity to 3,000 megawatts, from the current 1,183 megawatts, by 2018 to meet growing electricity demand amid robust economic activity, according to a proposal it has sent to top banks.

The financing, which will be staggered over a six-year period, will be the biggest fundraising by a single company in corporate Kenya.
This is the reason local big banks and international lenders like StanChart are eyeing the deal which would come with huge advisory fees and an opportunity for the parent companies to grow their financing portfolio.

“We as Barclays Kenya have made a joint bid with Absa for the $2 billion loan KenGen is seeking,” said Adan Mohamed, Barclays Banks of Kenya chief executive.

“The loan is too large for us, but Absa has a much bigger financial capacity,” he said. Johannesburg based Absa is a subsidiary of Barclays Plc.

Richard Etemesi, the CEO of StanChart, confirmed that the Kenyan unit is also seeking a piece of the KenGen loan.

“Yes, we have,” said Mr Etemesi in an email response to the Business Daily on whether the bank has bid for the advisory role.

The power producer plans to hire a financial advisor for two years, but the tenure of the contract is open for review.

“KenGen is therefore soliciting proposals from qualified firms to provide the services of a financial advisor and arranger,” KenGen said in its request for proposals seen by the Business Daily.

The company said that the advisor and arranger would “execute the financing plan to assist KenGen in identifying, designing, executing a suitable financing programme incorporating both debt and equity capital for its capacity expansion.”
The proposal was sent out in June and closed on July 27, with the winner expected to be picked on November 1.

The proposal states that KenGen is looking at a mix of financing options, including a syndicated loan, joint ventures, public private partnerships, as well as local and international bonds.

Strong

Companies seeking advisors to raise large capital like Kenya Petroleum Refineries Limited (KPRL) have traditionally relied on international financial services firms with local operations.

Some of the firms fitting this profile include Barclays Bank of Kenya, Standard Chartered Bank, and CFC Stanbic Bank, which are subsidiaries of large international banks that are strong in financial advisory and big-ticket lending.

Standard Chartered Plc won the financial advisory role for the Sh65 billion upgrade of KPRL.