“When I look at the books of Nigerian banks today, I don’t see a lot of dollar liquidity. It’s becoming a very difficult deal for people to pull off”
By Teddy Nwanunobi
Shell’s asset divestment in Nigeria has suffered a setback due to forex scarcity. Some of the assets that have been penciled down for sale by Shell have been abandoned, as local financial institutions lacked the capacity to facilitate their acquisition by interested indigenous investors.
Guarantee Trust Bank Plc disclosed that lenders in Nigeria likely do not have enough dollars to fund clients that are seeking to acquire assets put on sale by the local unit of Shell.
GTB does not see the likelihood of any client raising the estimated $2.3 billion that is needed to purchase the Shell Nigeria assets, the Chief Executive Officer (CEO) of the financial group that owns the lender, Segun Agbaje, said.
Such a deal would require a syndication of up to $1.8 billion.
“It can be very tough to raise this kind of funding locally at the moment,” Agbaje said.
Shell said in May that it would exit its onshore oil position in Nigeria, which it no longer considers compatible with its strategic ambitions.
“When I look at the books of Nigerian banks today, I don’t see a lot of dollar liquidity. It’s becoming a very difficult deal for people to pull off,” Agbaje told an investor conference call in Lagos State on Tuesday.
Nigerian banks, which in 2013 syndicated $3.3 billion debt to Dangote Industries for a refinery and petrochemical plant, and recently financed Heirs Holding’s $1.1 billion acquisition of OML 17, have seen their capacity to take on such deals wane considerably.A slump in crude prices and an economic downturn arising from the coronavirus pandemic curbed foreign-currency flows into Africa’s largest crude producer and pressured reserves.