Standard Bank on Monday announced the creation of a new R1.8-billion debt funding model for the South African agricultural sector.
Standard Bank will go into partnership with agribusiness, Transvaal Wattle Growers Co-operative Limited (TWK), and the Land Bank.
The 77-year-old business, TWK, provides a broad range of products and services to its stakeholders including timber, grain, trade and mechanisation, financial services, and vehicles and tyres.
The transaction is a first in agricultural finance in terms of the collaboration in a syndicated loan to TWK between Standard Bank as a commercial financial services provider and Land Bank as a parastatal financer.
It is also a first in terms of Standard Bank and TWK working together to restructure the cooperative’s balance sheet in a way that enables the bank to apply its financial insight from the corporate business world to agriculture’s operating environment.
Standard Bank head of agribusiness, Nico Groenewald, said that the new debt structure was aligned with TWK’s growth strategies and enhancing the balance sheet of the company. He said it was a perfect balance between the optimal financing mechanism and financing products.
“All credit must go to the visionary approach TWK’s board has taken in initially realising that they needed to structure the business differently in order to capitalise on the growth the company has already experienced and then in approaching us for our input as to how best to achieve that,” Groenewald said.
“TWK was prepared to change its financial model which made it possible for a commercial bank like Standard Bank to work together with the Land Bank and in combination create an optimal debt-funding structure. The funding model is ideally structured and can be scaled as the TWK business grows.”
Groenewald also said that they had been delighted to work with the Land Bank in proactively looking for different, more effective ways of funding agriculture.
“In this particular transaction, as a non-commercial entity, Land Bank’s willingness to innovate is a clear indication that the industry as a whole is moving in an extremely positive direction,” Groenewald said.
