Two bank on Mozambique’s potential wealth

TWOFORMERGoldman Sachs employees have set up a banking operation in Mozambique, betting that the country’s potential resource wealth will propel some of the fastest economic growth on the continent.

Rafael Sarandeses, 36, and Goncalo Neves-Correia, 34, have founded ThirdWay Africa Partners, an investment and advisory business that they are running out of offices in London, Madrid, and Maputo. The pair intend to invest in Mozambique companies that can take advantage of laws on local content, and which could later become potential targets for buyout firms.

The world’s biggest natural gas discovery in a decade off Mozambique’s northern coast could relieve widespread poverty in a country where 90 percent of people exist on less than $2 (R24) a day.

The economy, which the World Bank estimated at $15.6 billion in 2013, may expand 10-fold by 2035 as Mozambique becomes one of the three largest liquefied natural gas exporters, according to a Standard Bank forecast.

Key things

“We were both in banking and looking for a new challenge, something to build,” Sarandeses, who was born in Spain, said in an interview in Maputo on February 25.

“You start looking at what are going to be the key things that are going to have an effect on shaping the way the world is in the next 15 years, and where in the world you can try to tackle those plays with the most upside.“

Sarandeses joined Goldman Sachs in London in 2005, after 10 years as a professional racing driver in Spain. He left the bank in 2009 to run foreign exchange sales for Morgan Stanley in southern Europe.

Neves-Correia interrupted his banking career for a Harvard Business School MBA, where he was a George F Baker scholar, an accolade for students who earn their degrees with high distinction. Aside from Goldman Sachs, he has worked for McKinsey and was head of JPMorgan Chase’s European strategic investments operation.

ThirdWay Africa plans to invest in Mozambican companies providing services to foreign investors in the gas industry, which by law have to source goods and services locally.

“All those foreign companies coming to the country to invest are going to need products and services that do not exist right now,” Sarandeses said.

Lottery ticket

Mozambique published a law in December that sets the terms for gas projects in the Rovuma Basin led by Anadarko Petroleum and Rome-based Eni to proceed. The country has about 7 trillion cubic metres of reserves.

While the companies are still to make a final decision to invest, Mozambique’s government says growth has already accelerated and estimates it at almost 10 percent in 2014.

“This country is going through a transformation, it’s a once-in-a-lifetime opportunity with a lottery ticket called gas,” Sarandeses said.

Neves-Correia’s family has been involved in business in Mozambique since before it won independence from Portugal in 1975 and he sees his knowledge of the country as a selling point.

ThirdWay Africa intends to raise funds to invest in assets in industries including food, forestry, housing and financial services. – Bloomberg