It says much for London’s status as a financial centre that MediCapital, the new wholesale and investment banking arm of the BMCE group, is based there.
MediCapital specialises not just in emerging markets but in the even more esoteric regions of Francophone and Portuguese-speaking Africa, countries that have hitherto attracted little interest from London-based investors and bankers who, if they are interested in sub-Saharan Africa at all, tend to focus on English-speaking countries.
MediCapital chief executive Eric Aouani says: “MediCapital is the first bank founded by an investor from French-speaking Africa to be based in London. BMCE want to tap into a large investor base that is becoming increasingly aware of Africa and we want to connect them to our corporate clients. There are some large specialist funds being set up.
“It is true that people in London have tended to think that sub-Saharan Africa means Nigeria. But we are trying to open their eyes to the possibilities elsewhere, in large areas of Africa that might not speak English but where there is huge economic potential.”
He adds that sub-Saharan Africa can offer high returns in the present environment.
London interest
Mr Aouani, who previously worked for Citi and for Cargill Financial Markets, says there is plenty of interest in MediCapital’s activities from investors in London’s large investment community, and that many billions of dollars are being earmarked for Africa. The time is now right, he says, to introduce them to French and Portuguese-speaking African countries that have hitherto only attracted interest in France and Portugal. Such countries include Senegal, where infrastructure projects are proliferating, and Angola, the second biggest oil producer in sub-Saharan Africa, which could see GDP growth of 23% this year.
MediCapital is a UK bank that received approval from the Financial Services Authority in May, and is owned by a UK holding company, which is in turn 100% owned by BMCE (Banque Marocaine Du Commerce Extérieur).
Its core divisions of corporate banking, advisory and financial markets will be run out of London, Paris and Madrid. The mergers and acquisitions (M&A) advisory team will be based in Paris – since plenty of networking opportunities are afforded by the fact that Francophone Africans often take their holidays in France – as will some back offices. Private banking will also be added to Paris in due course, while trade finance will operate from Madrid.
The bank is also building a network of offices in Africa. “We need offices on the ground to be close to our clients. We will have London teams working on the big transactions but it is not cost-effective to rely on London teams to work on all African deals,” says Mr Aouani. This is especially important in Africa, he adds, because of cultural differences.
On the ground in Africa there are 15 offices, a figure which will rise to 19 during 2008, across all parts of the continent. Among the most important countries outside Morocco will be Senegal, Côte d’Ivoire, the Democratic Republic of Congo, Angola and Tunisia. Algeria, where BMCE has applied for a banking licence, could be added to the list.
Outside Morocco and Europe, many of the offices will be structured as joint ventures with the Bank of Africa, in which BMCE owns a 35% stake. This broad coverage of Africa is in line with BMCE’s ambition which is, according to BMCE’s chairman Othman Benjelloun, to make MediCapital an agent of wider change.
“We believe that, in operation MediCapital Bank will have a catalytic effect, not only by creating global horizons for growth in Africa, but also by helping to reframe the development debate in a way that emphasises the importance of local involvement, continuity and connection in the long term,” says Mr Benjelloun.
Mid-market deals
The bank plans to originate and structure deals in Africa and distribute them to the international investment community based in London. Such transactions are likely to be typically private sector and in the mid-market range which is often, according to MediCapital, too small for large international banks and too large for local banks.
“We won’t be leading the mega deals,” says David Suratgar, chairman of MediCapital Bank. This is a field dominated so far by French banks and, to a lesser extent, Portuguese banks in Angola and Mozambique, but they can now expect some determined competition.
In the corporate banking department, project, infrastructure and debt finance will be at the heart of the bank’s work, involving products and services that are perhaps normally associated with difficult emerging markets.
“We are, for instance, advising the African Development Bank and the World Bank on projects suitable for private sector involvement,” says Mr Suratgar.
Infrastructure focus
According to MediCapital: “Our special interest in infrastructure and industry is deliberate, as our strategy is to create sustained opportunities for development in Africa. We also target cashflow generative projects that enable us to structure deals in such a way that repayments can be made from operational revenues.”
But the financial markets division will offer foreign investors exposure to Africa in more unusual ways, through credit trading and structuring, equities trading, initial public offerings and foreign exchange trading. A problem might be a continuing lack of liquidity on African stock exchanges, but the bank says it sees a move towards “a more formal economy” with a “spreading equities culture for both listed and unlisted companies” and “a growing familiarity with bond and structured debt instruments, supported by continuing strong commodity prices and liquidity”.
And the advisory team will offer African corporate clients sophisticated services related to mergers and acquisitions and fundraising that are not widely available in Africa.
MediCapital employs about 130 professionals so far, most of them inherited from the group’s Morocco-based BMCE Capital, the existing investment banking arm, which has also been active in countries such as Senegal. There it helped to finance a new airport, and Tunisia-based Axis Capital.
From now, all of BMCE’s wholesale and investment banking operations outside Morocco will be branded MediCapital, while the retail activities in Africa outside Morocco will bear the Bank of Africa brand.
Recruitment drive
MediCapital also plans to recruit a further 70 professionals next year. About 50 bankers are based in London and they will be joined by 20 to 30 more in 2008. Many of the new recruits are likely to be professionals with a good knowledge of the local markets and not all will be Moroccan nationals. “Morocco is a good source of skilled bankers, but so are many other countries in the region. We have hired from 14 countries,” says Mr Suratgar.
In time, MediCapital says it will also seek to expand further afield to South America and other emerging markets. But Africa is its specialist field and will remain at the heart of the business. “MediCapital Bank has been established,” it says, “on the understanding that Africa is open for a new kind of business.”
A HEAVYWEIGHT LINE-UP
medicapital has already assembled an impressive group of senior bankers as non-executive directors of MediCapital Holdings and of MediCapital Bank. As well as offering important services directly to their employer, they will give MediCapital a strong profile in London and a wide range of international contacts.
On the holdings board, they include Peter Cooke, an eminent regulatory specialist who is a former head of banking supervision at the Bank of England. He also who headed the eponymous Cooke Committee, which turned into the Basel Committee.
Jeremy Carver, a well-known international lawyer and former partner at Clifford Chance, is also on the holdings board together with Stanislas Yassukovich, who was once chairman of Merrill Lynch’s Europe, Middle East and Africa division.
Vice-chairman of the holdings board is Jaloul Ayed, who also sits on the board of BMCE Bank and is a former senior banker at Citicorp.
On the bank’s board, the non-executive directors include Christopher Reeves, a former deputy chairman and group chief executive of Morgan Grenfell and chairman of Merrill Lynch Europe; Bernard Asher, a former head of HSBC Investment Bank; and John Botts, head of the private equity firm and previously a senior figure at Citigroup. They are joined by Ian Plenderleith CBE, a former member of the Bank of England’s Monetary Policy Committee.
Non-executive chairman David Suratgar is well known in the City of London and beyond as a former deputy chairman of Morgan Grenfell International, where he set up the international privatisations team and co-headed the Middle East department.
In the course of his career he has also worked for the World Bank, the European Investment Bank and the European Commission.
