Databank’s withdrawal from Agyapa sign of putting Ghana’s interests first

Flagbearer of the National Democratic Congress (NDC) for the 7 December 2020 Presidential and Parliamentary elections and former President of Ghana, John Dramani Mahama, on multiple campaign platforms ahead of the December 2020 elections, pledged to cancel the Agyapa Gold Royalties deal of the ‘Akufo-Addo led NPP 1’ government.

The basis for the threat to cancel the deal should he win the December 2020 general elections, was because of “suspected conflict of interest” on the part of Finance Minister designate, Ken Ofori-Atta, due to involvement of Databank, a mutual fund and investment company he co-founded over thirty (30) years ago, as transaction advisors.

The ‘Agyapa’ deal is essentially aiming at the monetizing Ghana’s gold royalties through the dual listing of a gold royalties company (Agyapa) on the Ghana and London Stock Exchanges.

However, on 10 December 2020, a day after the Chairperson of the Electoral Commission, Jean Mensa, declared President Akufo-Addo as the winner of the December 2020 elections, Databank in a letter addressed to Tom Gaffney, the Director of Imara Holdings Limited, signed by Kojo Addae-Mensah, the Group Chief Executive Officer of Databank and copied to the Director of Legal and the Director of TDMD of the Ministry of Finance, withdrew as Transaction Adviser in the Agyapa Deal.

It is obvious that the public criticism, largely politically motivated, over the transactional advisory role played by the premier investment banking and brokerage firm, Databank, led to a decision by the Board of Directors of Databank, to withdraw from the transaction completely.

The Withdrawal Letter

“The Board of Directors of Databank has observed with deep concern persistent attempts by some political actors, during the political season leading up to the general elections of December 2020, to tarnish our hard-won reputation painstakingly built over the last 30 years, by unfairly exploiting our participation and involvement in the transaction as one of the Transaction Advisors. We believe this is principally due to the then Minister of Finance’s association with Databank as its co-founder,” the withdrawal letter of Databank stated.

“It is unfortunate that we have to take this decision but we are absolutely convinced that as a firm that has always served the best interests of the Republic, across all governments in the 4th Republic, and will continue to do so, this is the right decision,” the statement further said.

The last sentence of the Databank withdrawal letter clearly revealed that Databank was putting the interest of the country first at the expense of their business interests.

“This transaction is a game changer for Ghana’s economic transformation and we cannot be the obstacle for such a breakthrough for the people of Ghana and the Republic,” Databank’s letter reads.

It is worth noting that even though the government of the day at the time of the Agyapa Gold Royalties transaction had clearly had a four-year renewed mandate and that the threat of the opposition leader, John Mahama, to cancel the deal was effectively moot, Databank still felt compelled to withdraw as ‘Transaction Adviser’ in the monetisation of the nation’s gold royalties project.

As a result of the withdrawal, Databank also forfeited any financial benefits that may have accrued to it for the work it had carried out for two and a half years as Transaction Adviser.

Landmark Transaction

Databank as a company, as far back as 1994, structured and executed a landmark transaction on the Ghana Stock Exchange(GSE) by packaging and brokering the US $25 million sale of all Government of Ghana’s shares in seven listed multinationals to a consortium of emerging market and offshore institutional investors including Morgan Stanley, Salomon Brothers, Blakeney, George Soro’s Quantum Emerging Markets Fund and a number of others.

This ground-breaking transaction significantly increased the market capitalization of GSE by over 60% at a go, thereby boosted liquidity and trading activity. It also introduced gilt-edged emerging market funds and asset management firms to the Ghana Stock Market and Ghanaian securities. Needless to say, with the impressive portfolio and accomplishments of Databank, it will surely not struggle because of a one lost deal.

Databank has spearheaded and executed several brokerage and investment banking transactions ranging from bond and other securities offerings to advisory mandates. Suffice to say, that Databank has been the pioneer of the securities and brokerage business in Ghana for the last 30 years.

The company grew from, a $25,000 capitalised start-up in 1990 with humble beginnings in a 1-room office in Kantamanto to now managing over $1 billion for some 500,000 Ghanaians across 19 locations and through its digital platforms.

Hopefully, irrespective of Databank’s withdrawal, the Agyapa deal after it has been re-submitted to Parliament for approval, will in due course become a gold royalties company of the magnitude of other major gold royalty companies like Wheaton and Franco Nevada with market capitalizations today of $23.4bn and $28.4bn, respectively.

Let me conclude with this summary of the position of Databank on the Agyapa Gold Royalties deal and the future of Ghana.

“There is no doubt that as a country, Ghana has extraordinary reserves of human capital and natural resources. The challenge is how to leverage these resources as sustainable investments for our common good in our bid to grow sustainably, create descent jobs and offer prosperity for Ghanaians.

“It is very clear that traditional financing mechanisms will not be able to keep pace with the social and economic changes required to transition Ghana “beyond aid”. We cannot continue to keep faith with the undignified practice of unbridled borrowing which will result in a debt trap and compromise the much-needed double digit growth rates whilst we continue to pay an Africa risk premium.

“This transaction will help to create a dynamic, market-based mechanism to enable the Government of Ghana raise non-debt funding on much more attractive terms to invest now for the future of our country. Surely this is an endeavour we can get behind to realize its much-needed gains for the posterity of Ghana”.

 

NOTE: The writer, Kojo Addae-Mensah is an accomplished banker with over two decades of banking experience. He has worked in Multinational banks like Standard Chartered and Barclays Bank, where he played various roles across Africa. He was also the Chief Operating Officer of GCB Bank before he took up his current role as the Group CEO of Databank