British International Investment

FirstRand Limited MRPA

AfricaFinancial services

FirstRand Group is a portfolio of integrated financial services businesses and offers a universal set of transactional, lending, investment and insurance products and services. The Group operates in operates in South Africa, 9 other countries in Sub-Saharan Africa, the UK, and India. FirstRand is listed on the Johannesburg Stock Exchange (JSE), the Namibian Stock Exchange (NSX),and is the largest financial institution by market capitalisation in Africa.

Our investment

Description of the investment.

We signed a risk participation arrangement with First Rand Bank to increase the availability of trade finance in developing countries across sub-Saharan Africa. In 2023 we downsized the facility in a bid to direct the use of the facility more towards higher priority countries for BII.

Impact information

Applies to investments made from 2019 onwards. The tabs in this section define what we expect to achieve through the investment, assessing the potential impact of the investment against six dimensions of impact. You can find more details on our methodology of assessing impact here.

What?

Impact
  • Sustained and potentially improved economic opportunities by providing liquidity to strengthen the capacity of domestic FIs in maintaining and increasing trade finance for businesses (SDG 8.1, 8.5) -Increased access to commodities and goods for businesses and consumers. (SDG 9.1, 9.2) , especially food (SDG 2.1, 1.5)

How?

Primary Secondary

Extend foreign currency trade credit to domestic African banks, sustaining and potentially increasing trade volumes. This will enable businesses to import the commodities, business inputs and capital equipment they need to sustain business operations, market output and contribution to GDP, ultimately leading to job/livelihood preservation and the continued availability of goods and services for consumers.

Employees

Who?

Stakeholder Geography Characteristics

Africa.

There is no visibility on the characteristics of people reached. It is fair to assume mass market characteristics and demographics of the respective geographies i.e. trades in Alpha and smaller Beta countries will more likely reach lower-income populations, and trades in Delta and Gamma countries will likely reach relatively more middle/high-income populations.

Customers

Africa

There is no visibility on the characteristics of people reached. It is fair to assume mass market characteristics and demographics of the respective geographies i.e. trades in Alpha and smaller Beta countries will more likely reach lower-income populations, and trades in Delta and Gamma countries will likely reach relatively more middle/high-income populations.

How much?

Scale Depth/Duration

We have no visibility on number of people reached, hence we use the scale of the facility and enabled trades as a proxy. Trade flow supported directly and indirectly of around $105m.

Depth: impact is expected to be deeper in a context where the counterfactual has worsened (i.e. slowdown in global growth, rising inflation exacerbated by the war in Ukraine, adverse weather conditions, a tightening in global financial conditions, the rising risk of debt distress and food insecurity), particularly in Alpha and smaller Beta markets. Duration: The duration of the impact of the trades themselves on consumers and firms will depend on the goods traded (e.g. foods staple vs. machinery), but are likely to be short to medium-term.

Contribution/additionality

Contribution/additionality

Commercial funding is not available in sufficient quantity nor on the same terms. There is a large trade finance gap in Africa and a retrenchment of capital, making commercial investors less willing to support African banks as well as increases in prices that result in more limited capacity to support trade.

Environmental and social information

  • Environmental and social summary

    A high-level description of the environmental and social aspects of the investment. This may include a summary of key environmental and social risks identified during environmental and social due diligence (ESDD); key elements of an environmental and social action plan (ESAP); or ways in which we plan to support the investee improve environmental and social standards, such as through their environmental and social management system (ESMS); as well as any other priority areas agreed with the investee.

  • Environmental and social risk

    A risk category rating, which indicates the level of environmental and social risk associated with an investment. For an explanation of the categorisations used, see here. We consistently provide an environmental and social risk category for all investments screened from 2023 onwards.

Environmental and social summary

BII approaches trade finance transactions through the application of its exclusion list, which prohibits trade in certain industry sectors, or trades that create unacceptable impacts. We actively monitor trades to ensure this requirement is met.

Reporting and Complaints Mechanism

The Reporting and Complaints Mechanism allows anyone outside BII to report alleged breaches of the business integrity or environmental and social provisions of BII’s Policy on Responsible Investing. This includes breaches made by BII, a BII investee, or a portfolio company of a fund in which BII has invested. The Reporting and Complaints Mechanism Rules are available here. Reports and complaints can be submitted by email to [email protected] or by mail. See more details on our Reporting and Complaints Mechanism here.

For any other general enquiries contact us at [email protected]

  • Key facts

    First published

    When the investment was first published on the website database.

    :
    October 2023
    Last updated

    When the last quarterly update of the website database occurred.

    :
    March 2024
    Project number

    An identifier number shared by investments in the same project.

    :
    D182
    Status

    The current status of the investment (green flag for active and red flag for exited).

    :
    Active
    Region

    The geographical region where the country is located. We currently invest in Africa, South Asia, South East Asia and the Caribbean. In 2023, BII’s investment mandate was extended allowing it to invest in regional funds linked to Ukraine, with the majority of activity expected to begin post-war. Investments outside these regions were made prior to 2012 under previous investment mandates.

    :
    Africa
    Sector

    We prioritise those sectors that facilitate development and need our capital the most. Our priority sectors contribute towards many of the Sustainable Development Goals. They range from investing in the power infrastructure that will provide people with better access to electricity, to investing in financial institutions that direct capital to the individuals and businesses that need it the most.

    :
    Financial services

    We provide capital in the following ways: directly – through direct equity, direct debt, guarantees and other non-intermediated financial instruments; and indirectly – principally through investment funds.

    For direct investments and fund investments, this is the date BII committed capital to the investments. This is typically the date on which legal agreements are signed by all parties.

    For the portfolio companies of our fund investments, this is the date (either the month or the quarter) on which the fund committed capital to the portfolio company.

    For direct equity investments, this is the date at which British International Investment exited the investment.

    For debt investments, this is the date at which the final debt repayment was made.

    For funds, this is the date at which the fund was terminated.

    For underlying fund investments, this is the date at which the fund manager exited the investment.

    The total amount committed, per financial instrument, per investment, on the date BII becomes subject to a binding legal obligation to provide funding or assume a contingent liability. This information is provided in US dollars.

    For direct investments, this is the amount that BII has committed to the business or project. For fund investments, this is the amount BII has committed to the fund.

    The currency in which the investment was made.

    Investment type :
    Guarantee
    Start date :
    May 2023
    Amount :
    $-25m
    Currency of investment :
    USD
    Domicile

    The company or investment fund’s place of incorporation.

    :
    South Africa

Related investments made by BII into this company:

Investment name Commitment Region Sector Start date Status
Investment 01 $100m Africa Financial services December 2016 Active
Investment 02 $100m AfricaAfrica Financial services November 2019 Active

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