How UBA shows market dominance with big ticket transactions

A series of big
ticket transactions engineered by United Bank for Africa Plc (UBA) in 2013
either as lead arranger, co-arranger or major lending partner has entrenched
the bank as a dominant financial institution in Africa and shows its potential
to make significant returns for shareholders in 2014.
Phillips Oduoza-GMD/CEO, UBA Plc
UBA which closed
the third quarter of 2013 with a total balance sheet size of N3.3 trillion was
dominant in all the major banking deals of 2013.  The deals, which cut across the major economic
sectors of telecoms, power, oil and gas indicates the bank’s clear intention to
play big in the key sectors of the economy and ties in with the bank’s
announced intent to dominate the African banking space.  Already UBA has subsidiaries in 18 African countries
outside Nigeria.
In the power sector
for example, some of the major deals UBA actively participated in include
taking up $120m (N19.44bn) of the financing in respect of Transcorp Ughelli
Power Plant. 
The bank also acted
as Mandated Lead Arranger, underwriting the entire facility of $122m (N20bn)
for Kann Utilities’ acquisition of the Abuja Electricity Distribution Company,
financing the payment of 75% acquisition of 60% equity stake in Ikeja
Electricity Distribution Company while the bank also   threw
its financial weight behind Aura Energy for the Acquisition of Jos Electricity
Distribution Company, acting as the lead arranger for N9.6 billion to finance
the payment of 75% of Aura’s 60% equity stake in Jos Electricity Distribution
UBA also
successfully arranged debt financing of US$68m as well as secured equity
investment from a strategic and technical investors for the acquisition of the
Shiroro Hydroelectric Power Plc by North South Power Company Limited.
In the oil and gas
sector, UBA Plc joined 11 other banks to arrange a $3.3billion dollar loan deal
for Dangote Industries Ltd owned by Africa’s richest man, Aliko Dangote.
The $3.3 billion finance
will facilitate the building of the biggest petroleum oil refinery as well as a
petrochemical and fertilizer plant in Nigeria. The proposed largest refinery in
Africa is expected to have a capacity of refining 400,000 barrels of crude oil
per day and turn Nigeria into a petroleum exporter.
UBA also acted as
the co-arranging bank in a $500m syndicated loan deal for Orion Oil Limited.  Ecobank Capital acted as the Mandated Lead
The US$500m will be
utilised for the prepayment of crude oil cargos to be supplied by Société
Nationale des Pétroles du Congo (The National Oil Company of the Republic of
Congo). The facility comprises a United States dollar-denominated $342m tranche
and a XAF-denominated $158m tranche.
This transaction
was the largest loan syndication completed to date in Central Africa solely
funded by regional African banks and for an indigenous company.
The bank also
signed a Memorandum of Understanding (MOU) with Total upstream in collaboration
with seven other Nigerian banks.
The objective of
the collaboration is to strengthen indigenous capacity in the oil and gas
industry, explained Elizabeth Sagay, Divisional Head, Oil and Gas, UBA during
the signing ceremony. 


UBA and the other banks
involved in the scheme are providing funding for Total’s local contractors for
the execution of the company’s projects. The funding scheme is estimated at
more than US$1billion dollars. 
UBA Plc signed
another MOU with Nigerian Liquefied Natural Gas (NLNG) to also finance local
contractors and vendors of the company.  The
MOU, signed in conjunction with four other banks, is expected to help NLNG’s
local contractors and vendors have access to $1 billion in credits from the
five banks to speed up delivery of contracts to the company.
In the cement
sector, UBA was a lead participant in a syndicated $680M loan deal with United
Cement Company of Nigeria (UNICEM). The loan deal will help the company expand
its cement production, by adding an additional production line. UBA Plc is
contributing a total of $130m of the syndicated facility packaged by a
consortium of banks.
 “We firmly believe that the effect of the
asset creation decisions we have taken this year will have a sustained impact
on our revenue growth” Phillips Oduoza, UBA Group’s GMD/CEO explained.
Analysts also note
that the bank’s selection of its deal portfolio means it is now positioned
firmly in the key sectors of the economy that could easily be described as the
“Cash Cows” of the future.
“These decisions
will definitely have a positive impact on the bank’s revenue streams in future
when these projects start making money” said a financial analyst. 


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