Standard Bank has won a mandate from South African Infrastructure Investment Company (SAIIC) to finance a US$67.5mn export finance facility.
SAIIC will use the funds to develop and upgrade the Beitbridge Border Post (BBP) between South Africa and Zimbabwe.
Standard Bank, as the sole mandated lead arranger and lender, will finance the 18-month project, while South Africa’s ECIC will provide Standard Bank with 100% political risk insurance and 85% commercial risk Insurance.
The loan has a tenor of 11 years, including a 24-month delivery period. It is priced at 250 basis points over Libor, plus the 3% per annum cost of the ECIC premium, Standard Bank tells GTR.
Greg Fyfe, Standard Bank’s director for mining energy and infrastructure explains to GTR: “We are especially pleased with the deal as it is the first large scale cross-border deal we have underwritten into Zimbabwe and the funding is to be used to upgrade a critical infrastructure asset in the region.”
The project sponsor SAIIC is a joint venture company formed by Old Mutual, which is the lead equity investor in the deal.
With the Beitbridge Post being one of the busiest in the SADC economic region, the project will upgrade the border post, construct the main access road to the border, and provide a weighbridge facility and accommodation for government staff at the post.
Ziyaad Sarang, investment banking head of infrastructure finance at Standard Bank says research has proven that as much as 30-40% of the cost of goods across the region is made up of transportation and logistics costs.
He adds: “South Africa is a critical source of imports to Zimbabwe and any initiative that reduces the cost of transport between the two countries is desirable from both governments’ perspective. Similarly, there are obvious benefits in Zimbabwe improving the transit efficiency of the NSC. These include revenue generation, trade and economic growth.”
The project will be on a build-operate-transfer basis, with the concessionaire solely funding the investment and generating revenue from toll fares charged to travellers and transporters using the upgraded border post infrastructure and related services.