French lender Natixis aims for revenue expansion in Middle East
▶ The bank is focusing mainly on project finance, M&As and IPOs
French lender Natixis expects to post double-digit growth in its Middle East revenue as it continues to pursue project finance deals and expand into mergers and acquisitions and initial public offering segments, executives said.
“We have grown consistently at double digits each year in revenue since we started accelerating the Middle East [focus] from the start of the last plan in 2014,” said Simon Eedle, managing director for the Middle East. “It is a major market for us.”
Natixis, the corporate banking division of unlisted French bank BPCE, focuses on four areas for structured finance in the region: real estate, hospitality, aviation and infrastructure. The lender is also involved in green energy and green bonds, which are used to finance environmentally friendly projects.
Last year it closed four deals with a total project cost of $3.12 billion (Dh11.4bn), which include three power projects in the UAE and Saudi Arabia and a liquefied natural gas project in Bahrain.
International and local banks have appetite for lending to big projects, particularly as the region continues to spend on infrastructure and other vital sectors to propel economic growth.
Natixis, which operates in 14 countries in the Middle East including Turkey, is working on at least five infrastructure project finance mandates in the Arabian Gulf region, which are expected to close next year. Two to three of them are related to energy resources.
“Project finance is a very important business for us and there are huge needs in that sector, whether it is a shift from oil producing [power generation assets] to renewables or whether it is a shift in investment in energy and natural resources to more downstream diversification,” said Mr Eedle.
The bank is considering opening an office in Saudi Arabia to boost its business in the kingdom, which is undertaking major projects as part of its Vision 2030, a road map for weaning the country off oil income.
“Many of the projects in the renewable sector have Saudi investors or Saudi equity holders,” said Mr Eedle. “We have also been very active with banks in Saudi Arabia. You can’t have a coherent strategy in the region without having a strategy on Saudi Arabia.”
The Middle East accounts for about 5 per cent of Natixis’s international business and the bank wants it to grow further, according to Marc Vincent, global head of corporate and investment banking.
“We are very selective in what we aim to do,” Mr Vincent said. “There is a great consistency between our overall goals and the needs of the region and our clients in the region.”
The bank wants to grow its M&A business in the Middle East after acquiring three boutique companies that will expand its expertise in this sector, he added.
“We feel now that we have this network of boutiques with an international platform we may be in a position to seize more [M&A] opportunities in the region thanks to the network and new angle we can bring to our clients,” said Mr Vincent.
“We are obviously focusing on the four sectors but we are open to other sectors of [M&A].”
Natixis, which has a 10 per cent stake in EFG Hermes, is keen to work with the Egyptian investment bank on deals.
The French lender has also been mandated on two initial public offerings in the Middle East, one in Saudi Arabia and one in the UAE, Mr Vincent said, declining to name the companies. Natixis is involved in the potential IPO of Acwa Power, the Saudi Arabian power and water developer, according to media reports.
“It [IPO] is a big process and you need to have good market conditions,” said Mr Vincent.