FirstRand Sees West African Expansion as Nigeria Deals Rise

FirstRand Ltd. (FSR), owner of South Africa’s second-largest bank, plans to build its West African business by financing regional infrastructure projects and increasing investments in Nigeria.

“Growth of our rest-of-Africa business is increasingly faster and larger than South Africa and part of that is attributed to the push in Nigeria, Ghana and West Africa,” Michael Larbie, chief executive officer of the Nigerian unit and regional head of West Africa, said in Oct. 18 interview in Lagos, Nigeria’s commercial capital.

FirstRand’s Rand Merchant Bank has completed more than $1.6 billion of deals in Nigeria since February, including providing credit lines for banks and finance for Dangote Group and MTN Group Ltd. (MTN)’s mobile-phone business, Larbie said. The company is looking at transactions in Ivory Coast and Senegal and is focused on other countries that are “democratically and economically stable, with good fundamentals,” he said.

Standard Chartered Plc (STAN), Barclays Plc and Johannesburg-based FirstRand are among the banks expanding in West Africa where countries, including Nigeria, the continent’s top oil producer, and Ghana, are growing faster than developed nations.

FirstRand opened an investment banking unit in Nigeria in 2012 and also obtained a license for fixed-income trading from the Securities and Exchange Commission. The bank expects its business in Nigeria, where it has a pipeline of deals in the power, cement and ports industries, to grow at a faster pace than gross domestic product, which the finance ministry projects to increase by 6.5 percent this year, said Larbie.

Growth Prospects

While delays to oil and gas industry regulation have hurt investment and growth, the government’s sale of 14 power plants will boost Nigeria’s GDP by 1.5 percentage points to 2.5 percentage points as it increases manufacturing capacity, said Larbie.

“We are excited by the growth prospects we see in Nigeria and West Africa,” he said. “A foreign bank will be encouraged to take up deals in the country, when local banks are willing to share in the risk.”

Larbie “strongly believes” the bank will eventually open a retail business in the country, even after FirstRand ended talks to buy Nigeria’s Sterling Bank Plc in 2011.

The lender is “actively looking” at opening an office in Ghana, after ending negotiations to buy Merchant Bank Ghana on July 12, said Larbie.

To contact the reporter on this story: Emele Onu in Lagos at eonu1@bloomberg.net

To contact the editor responsible for this story: Dale Crofts at dcrofts@bloomberg.net

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