The Industrial and Commercial Bank of China Limited (ICBC),has announced it was buying 20% of Africa’s biggest bank, Standard Bank, for $5.5 billion.ICBC is China’s biggest bank. The deal with the South African lender is the biggest-ever foreign direct investment into South Africa and ICBC’s biggest-ever investment outside China.
The deal will help give the Chinese government,important influence and credibility when making investments in Africa.Standard Bank is in 17 countries in Africa, and has investments in many African firms.
Rapidly-industrializing China has increasingly relied on Africa for commodities like copper, zinc, gold and iron, which are abundant. About 13% of Africa’s exports now go to China, and trade from Africa to China is growing by 50% every year.China also likes Africa because it’s relatively uncomplicated.
The two banks have already worked out an impressive system for cooperation.the most interesting part is the,”global resource fund,” which Standard Bank and ICBC are planning to set up as part of their new tie-up. Essentially it is a private equity fund, with a joint management team, into which both banks will provide seed money before inviting further investment. The banks aim to create a $1 billion fund focused on emerging markets.