As SA's renewable energy programme gains momentum, it's likely to see new and more sophisticated kinds of financing that could bring in a wider pool of investors.
So says Zoya Sisulu, who recently joined Goldman Sachs SA as its new head of financing, tasked with building the global bank's offering and expand its previous focus in SA on mergers & acquisitions (M&A) and Equity Capital Markets (ECM).
Financing would include a broad spectrum of advice and issuance for clients, including raising debt and equity capital, as well as syndicated loans, project finance and risk management instruments.
Goldman Sachs began an expansion in SA when it gained a full bank branch licence at the end of 2019. It has since doubled its staff in Johannesburg to 30 people and is hiring more, while continuing also to service South African clients from its other offices globally.
It already has significant market share in bonds and currency trading and is seeking approval from the Treasury to become a primary dealer in government bonds. The bank hopes this will happen before year-end.
"We are investing a lot in the South African platform and the South African business and this is really to round off the investment banking offering and complement what we've had, which was focused on M&A and ECM," said Sisulu, who spent much of her career in debt capital markets at Standard Bank corporate & investment banking.
She said European countries were much further in their renewable energy journeys, with markets that were far more developed.
"SA's renewable energy programme seems to be gathering real momentum at the moment, which is promising to add much needed mega-watts to the grid. But as it scales up we will start to see more development and sophistication in the financing instru-ments and formats."
Previous rounds of SA's renewable energy programme relied mostly on loan finance from banks and institutions, whereas in other markets there is far more participation by the capital markets.
Sisulu said SA could start to see financing and co-financing of portfolios of renewable energy assets, rather than project-by-project financing, and there was scope for different formats both on the debt and equity side.
The JSE had also worked hard to develop a project bond market, she said. And as more projects came to market there would be scope for pooling or securitising instruments.
"SA has not yet reached the kind of momentum required to push the boundaries from a financing perspective. There is still lots of scope and support, in line with how capital is being allocated globally," she said.
While globally there is a lot of M&A activity as markets open up, in SA this is still muted. But Sisulu sees opportunities in environment, sustainability and governance (ESG) financing, which is a key theme globally and increasingly so in SA. Institutions and corporates are also sharpening their focus on carbon emissions, with equity and debt investors looking at instruments to manage and mitigate the risk to balance sheets.
"In SA, active managers and pension funds are starting to embed ESG more deeply in their allocation of capital, and corporate clients in response are starting to get a handle on how and when to infuse those elements in their financing strategies," Sisulu said.
Having someone on the ground in SA will help Goldman Sachs build on its relationships with existing clients and drive conversations on these big themes, she said.
But while her focus tends to be on large corporate clients, Goldman Sachs also takes smaller enterprises seriously, particularly those owned by women entrepreneurs, through its 10,000 Women and 10,000 Small Businesses programmes, which it runs globally including in SA.
Its recently released "Womenomics" report on how the pandemic affected women entrepreneurs who graduated from its programmes found that those in Africa were harder hit than elsewhere.
Access to financing was overwhelmingly cited as the biggest challenge to being a female entrepreneur, with 65% citing this in Africa against 44% globally, while declining sales emerged as the biggest Covid impact, with 70% of entrepreneurs in Africa seeing a decline against 60% globally.
In Africa as elsewhere, Covid drove a migration to digital ways of doing business.
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