Commodity finance house of the year: Societe Generale

From arranging financing for a liquefied natural gas (LNG) project in Angola to advising the sponsors of one of the world’s largest wind farms, Societe Generale faced down difficult market conditions in 2016 to participate in major deals across the commodity finance spectrum.

“Last year was not for the faint-hearted when it came to natural resources and commodities,” says Federico Turegano, the bank’s global head of natural resources and energy financing. “In 2015 we saw the price of oil halve, [reaching] $28 per barrel by the end of January 2016 and then doubling again by year-end [2016],” he says. “But we still did not see the kinds of prices producers would have liked.” He believes Societe Generale’s sector focus and global market reach is the key to its continued success amid such conditions.

While interest in other segments lagged, renewable energy was a driving force behind project finance demand in 2016, according to Olivier Musset, managing director, global head of the energy group at Societe Generale. “Momentum from COP 21 [the 2015 United Nations Climate Change Conference] boosted the investment flow to renewables last year,” he says. Capitalising on this interest, Turegano says Societe Generale participated in every European wind deal in 2016, including the 402 megawatt Dudgeon Offshore Wind Farm off the Norfolk coast, which is expected to power around 410,000 UK households following completion in late 2017.

The LNG market had been on a similar trajectory to renewable energy in recent years, but stalled in 2016 due to overcapacity in the US and Australian markets. Societe Generale remained involved, however, advising on one of the largest ever energy financings in Africa for Angola LNG, among other projects. “Being a leader in LNG, it was good for us to hold a top line position in the few projects that we did see in the market last year,” Musset adds.

Similarly, Societe Generale remained active in the upstream oil and gas sector amid an industry lull due to low prices and tighter regulations. It worked with Castleton Commodities International on a major East Texas shale acquisition in November, which was “the start of a series of transactions, the fruits of which we will see taking shape this year”, says Musset. Such activity certainly supports Turegano’s argument that success in this market relies not just on the ability to execute deals, but “the ability to do so in adverse market conditions”.