Oando–Conoco close $1.65bn deal as FCMB Capital Markets emerges lead arranger
FCMB Capital Markets, the investment banking arm of FCMB group has emerged the lead arranger as Oando Energy Resources (OER), the upstream business of Oando Plc; signs the ConocoPhillips acquisition agreement that will make Oando one of the largest indigenous oil and gas companies in Nigeria.
The agreement signing and completion ceremony will take place today, in Paris.
FCMB Capital Markets Limited, a subsidiary of FCMB Group Plc, played the dual role of the Mandated Lead Arranger and Technical Bank, while First City Monument Bank Limited, its sister company, was one of the major lenders in the transaction.
The $1.65 billion deal which is expected to increase Oando’s crude oil production from about 5,000 barrels per day to 50,000 bpd, was concluded following the satisfaction of all statutory requirements and approval of the Federal Government of Nigeria.
“This acquisition satisfies our criteria for assets in production, as well as excellent appraisal and exploration prospects,” Wale Tinubu, chairman, OER said.
FCMB’s emergence as lead arranger in one of Africa’s largest deals this year, comes as local banks are increasing their investment banking (IB) capacity to handle the most sophisticated deals.
Three Nigerian firms –Vetiva Capital Managements Ltd, FCMB Capital Markets and FBN Capital finance, emerged in the top ten lists for Sub-Sahara Africa Equity Capital Markets IB fee rankings for H1 2013, according to data from Thompson Reuters deals intelligence.
Domestic firms are developing investment-banking capacity as deals explode in Africa’s largest economy, powered by an emerging middle class and rising consumer spending.
Projected growth rates of roughly 7.1 percent per year through 2030, would raise Nigeria’s total GDP to more than $1.6 trillion, making it a top-20 global economy, according to consulting firm, McKinsey, in a report released last week.
Some signature deals already done by FCMB Capital Markets include acting as Mandated Lead Arranger Advisors, for Accugas Limited, a wholly-owned subsidiary of Seven Energy, on a $225 million Medium Term Project Finance Facility for its Central Processing Facility (CPF) and second gas pipeline project in Akwa Ibom, and sole financial adviser and arranger of a $65 million structured debt finance for a 14 story eco- friendly office complex in Lagos, called The Heritage Place.
The rise of domestic investment banks, unencumbered by memories of the 2009 crash of Nigeria’s capital markets, signals a growing sophistication of Nigeria’s financial services industry, say analysts.
“Investment bankers have a big role to play in deepening the economy by assisting businesses, governments and even individuals create innovative ideas and implementing them,” said the CEO of a Nigerian boutique investment bank, in an interview with BusinessDay earlier in the year.
FCMB group reported that net income increased by 3 percent to N9.57 billion in the Half Year 2014 period, compared with N9.27 billion as at HY 2013.
Nigeria’s financial regulators have dismantled the one size fits all banking model, which existed before the home grown banking crises.
Banks are now to operate with different capital requirements or group holding company structure, as either international, local or regional banks, while two merchant banks have also been licensed.
First City Monument Bank is a member of FCMB Group Plc, which is one of the leading financial services institutions in Nigeria.
FCMB Capital Markets Limited is the investment banking advisory arm of FCMB Group Plc, specialising in equity and debt capital raising, mergers and acquisitions advisory and other forms of financial advisory services.
OER, through the acquisition, picks up Philip Oil Co. Nigeria Limited’s 20 percent non-operating interest in Oil Mining Leases (OMLs) 60, 61, 62, and 63 as well as the related infrastructure and facilities in the Nigerian Agip Oil Company Ltd joint venture (NAOC JV).
The 20 percent interest in the NAOC JV includes 40 discovered oil and gas fields with remaining oil and gas recovery; approximately 40 identified prospects and leads; 12 production stations; approximately 950 km of crude oil, natural gas liquids and natural gas pipelines; two gas processing plants; the Brass River Oil Terminal; the Kwale-Okpai 480 MW combined cycle gas-fired power plant (“Kwale-Okpai IPP”), and associated infrastructure.