South Africa

With foreign direct investment (FDI) commonly touching $20bn, a renewed focus on education and long overdue investment in the power sector, South Africa is clearly worth investing in. But there are plenty of challenges, not least the moribund domestic economy, electricity shortages, rising US rates, drought and a China slowdown. As a result, there will continue to be short term pain, but the outlook for the long term is brightening. Chris Wright reports.

Standard Chartered and Lonmin both begin new chapters in their stories today, with fresh capital from rights issues. In both cases the underwriting banks had to work for their fees, as the stories required explaining and each deal ended in a rump placement today.

Ethos Private Equity sold in a block trade on Tuesday night its last shares in Transaction Capital, the Johannesburg-listed commercial finance company.

Standard Chartered and Lonmin will each begin a new chapter in their stories on Friday, as results are published of their rights issues, books for which closed on Thursday.

Anglo American’s announcement this week that it will increase its asset sales target to $4bn, as part of a plan to adjust to painfully lower minerals prices, is the latest sign of two trends that are expected to drive M&A activity and equity capital markets business in 2016: carve-outs and divestments of assets; and the shake-up in natural resources.

South Africa is having rating trouble, and it looks serious. Since Friday, it is teetering on the edge of investment grade at both Standard & Poor’s and Fitch, a big problem for a country with a lot of infrastructure to build. But South Africa’s woes don't go too deep, and the country's growth could bounce back quickly.

Citigroup and Morgan Stanley have on Thursday night launched and closed the expected $2.5bn capital raising for Naspers, the South African media and e-commerce company, as an accelerated bookbuild. The sale is covered.

South Africa’s FirstRand Bank will sign its $225m loan next week, according to a banker close to the deal.

The Development Bank of Southern Africa is tightening ties with Japanese lenders in pursuit of cheaper funding, having signed a $250m loan with Japanese banks earlier this year.

IFC has issued its first ever rand denominated green bond as it continues to expand its global programme of climate aware financing.

ArcelorMittal South Africa is seeking to raise R4.5bn ($321m) to improve its weakened financial position, with a rights issue fully underwritten by its parent, ArcelorMittal Group.

Lonmin's $407m rescue rights issue passed its first hurdle on Thursday (November 19), when shareholders voted strongly to approve the deal. Lonmin's shares fell 2.6%, but that was mild by recent standards.