Dubai: A long period of oil price decline and the GCC governments’ efforts to structurally transform economies are throwing up huge opportunities to deploy both intellectual and financial capital in the region, said Frederic Oudea, CEO of Societe Generale in an exclusive interview with Gulf News.
“We have had a pretty steady strategy for the region for the last 4 years while taking advantage of our core expertise. Last year we said we will put some of our people and expertise in structured finance and infrastructure finance and asset finance. Within a short span of time we have had good results. Of course, the reform efforts in the region come with a lot of opportunities,” he said.
Although there has been a slowdown in economic activities due the pressure from lower oil prices, the economic situation has increased the region’s demand for international funding from varying sources ranging from governments, private sector, public private partnerships and financial services sector.
While debt capital market funding is a very important component of demand for funds from the region, going forward, Societe Generale sees new demand for funding to coming from diverse supply sources.
“What we have witnessed during the past two years is the emergence of regional sovereigns as a very sizeable source of the demand for capital in a very wide range of formats. Some of the sovereigns in the region are putting in place debt management offices. We see this as an opportunity because we are not only a bank that lends money. But we have a lot of intellectual capital to contribute especially in these countries which are ramping up efforts to source funding from global markets,” said Richad Soundardjee, Chief Executive Officer Middle East, Societe Generale.
Industrial base
Deployment of the bank’s intellectual capital is very much focused on some of the areas where it is a leading a leading player. One such area is Export Credit Agency (ECA) financing. The bank has grown significantly in the region in this franchise over the past couple of years, especially this year. While many sovereigns in the region attempt a structural change in their economies to move away from excessive dependence on oil sector, many of them want to strengthen their industrial base. This calls for large investments in infrastructure. Soundardjee said ECA financing is a great option for many of these infrastructure related investments.
The bank is looking forward to the Dubai Metro expansion mandate which has great potential for ECA finance. In the context of a growing number of governments and corporates in the region taking recourse to ECA financing, Oudea sees opportunities for innovative structures in ECA deals. Recently in Saudi Arabia, the bank helped a leading food and beverage company to raise funds in the ECA space in an Islamic format.
In addition to its role in structured finance and debt financing, the bank is keen on participating large projects that require participation of global investors.
“There are talks of development of very large projects. Wherever possible we want to participate. There are a lot of very ambitious projects planned for the future in the next 5 to 10 years. So far we have seen big demand coming in for debt finance and advisory from the region. We think a lot more opportunities to participate in financing infrastructure projects are coming up in the UAE in the near future, especially for the projects related to Expo 2020,” said Oudea.
International investors
The huge amount of investments involved in these projects demand participation from international investors and the bank expects it can play an effective role to in placing some of these with international investors.
Private banking and wealth management is another area that the bank is focusing on in the region. With its pan-European presence and the acquisitions of Kleinwort Benson in the UK and Kleinwort Benson Channel Islands Holdings, the bank is a major player in private banking in the UK with more than 16 billion pounds worth assets under management.
“With access to all major European markets and a significant presence in London we expect to gain market share in the Middle East focused wealth management business,” said Oudea.
