Capital Markets 2016: Q&A

Who’s Who Legal speaks with Clinton van Loggerenberg, director of banking and finance at ENSafrica, to find out more about what has been going on in the market in the last 12 months.

clive

Has the recent spike in renewable and alternative energy-related structured financings continued into this year in your jurisdiction? Which other sectors have seen an increase in activity? What is driving this?

Yes, the South African government has continued to press ahead with its project aimed at ensuring that up to 20 per cent of the national power supply is generated through renewable energy sources. The initiative is underpinned by a number of public-private partnership opportunities. These projects require funding and, although the initial round of projects were funded directly by banks or off the balance sheet of the sponsor, as the market has matured we’ve increasingly seen innovative and structured financing arrangements being put in place to provide financing opportunities across a broader spectrum of investors. This includes institutional investors such as pension funds, asset managers, insurance companies and development-financing institutions. These types of transactions lend themselves to whole-project securitisations, participation bonds and the use of derivatives.

How would you assess the current legal market for firms providing structured finance legal services?

Although most African markets have entered a period of relatively slow growth, there are still significant opportunities for legal firms that are able to provide innovative, sophisticated solutions to help facilitate the financing of structured finance projects. We have found that although there are fewer smaller and medium-sized projects, there continue to be strong workflows insofar as large and complex transactions are concerned. The number of specialist derivative lawyers in the African market is generally relatively limited, which has enabled a firm like ENSafrica, with deep expertise in this area, to attract and maintain significant workflows.

How is your firm responding to the challenges facing the industry at present?

A number of large firms appear to be under financial stress, given the challenging market. ENSafrica has significantly increased its focus on distressed debt and debt-restructuring solutions. We have sought to focus on the higher-end, more sophisticated tier of the market; for example, assisting banks with structuring products that qualify as tier 1 and tier 2 capital under the Basel III regulations. There are also significant opportunities to reach the under-banked public in Africa, and our market-leading fintech expertise has placed us in an excellent position to service the fintech industry as it expands in the African continent.

Do you have any predictions for the market in the coming year?

We believe that the African market will face headwinds in the upcoming year. That said, the fact that currencies are relatively weak in many jurisdictions means that there are significant opportunities for strong institutions with a medium to long-term investment outlook to acquire operations in the African markets, and/or to expand their operations in these jurisdictions. We expect to see a number of South African institutions and bond issuers undertake restructurings of their capital structures; and we expect to continue attracting strong workflows in relation to structured and innovative financial products.

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