RE: Kefi - bid prospects26 Nov 2024 01:39
Hi Fantasy
The caveat first - I've not done business in Ethiopia and I am unaware of all the unique nuances that exist in-country.
My background is banking, and specifically for the last 20, working buy-side M&A in the US, Europe, EMEA & Australasia. Sell side is the vendor.
I was essentially involved in putting senior debt (bank money) into acquisitions where private equity (PE) firms/sponsors are buying target businesses. So, I know a bit about the deal dynamics of working with debt/equity and also both public and private sector stakeholders.
TKGM is a public/private debt & equity deal, albeit it's not M&A.
As with nearly all these deals, the debt forms the core of funding and the bank/s put in the majority of the funding requirement. Typically this is via a blend of senior debt, and sometimes junior (more risky, less secured, more expensive, second ranking) and they have been known to link some funds to an equity participation.
Because they are putting in the lions share, they call the shots, and the master finance agreements and inter-creditor deeds etc are typically generated (for starters) by their lawyers, and then distributed out to all parties in the consortium.
The only thing that has been a head scratcher for me is the amount of time elapsed between 1st and 2nd bank committee approvals.
There is an element of commonality and reliance on DD (despite what other posters have suggested). This is not to say that both banks look at exactly the same data at the same time, but elements of DD are done once, and then directed to separate lenders/investors according to their individual instructions. A good example would be asset valuations (mineral) and also financial due diligence (FDD).
Like anything, due diligence has a shelf life, and you probably wouldn't want to rely upon information much past say 90-120 days from a credit perspective, and in the majority of cases. This delay between banks didn't make sense to me, but I don't know all the facts.
It is encouraging to read that the second bank approval has triggered the first bank to 'refresh' it's approvals, which is another way of saying.. making sure the underlying dd/valuations are still supportive of the deal structure as of now.
The area that will inevitably suck up significant amounts of time is legal.
When you buy a house you have a buyer and a seller, and there's either a home loan in the mix or it's cash. simples.
This is about as complex as it gets in truth.
You've got more than one debt provider, you've got government participation at varying levels and then you have private sector stakeholders (in country and potentially offshore I seem to recall). They ALL have advisors (across both legal and financial) and everyone needs to sign off before you can circulate final documentation for co-signing. Further, you are not starting with English Law either!
So, the deal is starting to make more sense to me than it did pre 2nd bank sign off, but
Sign In
Follow the stocks
