Experience of lead arranger of a syndication deal

A special assignment of becoming the lead arranger of a large syndication deal has been offered to a dealing officer of a commercial bank. It was the first-time role of a lead arranger for that bank. The project was fourth Shariah-based syndication deal in Bangladesh. Till now after operation of the project, no Shariah-based syndication deal came to the market. Initially, the branch management wanted to do the project bilaterally having full support. But later, the management and the promoter decided to opt for a syndication of the project involving various participating banks.
For any syndication deal, the borrower should be strong enough to face many uncertainties in the long run. These days the borrower does not like time wasting fund-raising procedure a syndication deal may require. Fund raising for a medium project (Tk 1 billion) may take minimum six months to close the process. Nowadays, borrowers go for bilateral deals or club financing considering both time and financial cost involved.
 For a syndication deal, all participating banks' compliance is required to close or continue the deal.
Key participating banks expected a lot from the host-bank as it was a maiden syndication deal. Some key top executives from the participating banks wanted to deliver speeches at the deal closure programme held at a five-star hotel. The host bank's promoters gave several speeches during the formal programme. It was a tight schedule during the Ramadan. A number of the host bank's promoters gave long speeches during the programme and finished just before Iftar. As a result, the top executives from the participating banks could not deliver any congratulatory speech or make comments on the project finance deal. Some of them even criticised such a colourful event without speeches from the participating financial institutions.
For completion of the deal, two officers had to work hard from morning to night, even during the month of the Ramadan. There was a huge work pressure as the bank had to participate in several project finance deals at a time. The more awkward situation unfolded when one officer left office for two months who had been suffering from hepatitis. The other person had to face tremendous pressure and workload while completing all deal closure works alone. After closing the deal, the officer did not get any recognition, even an appreciation letter from the management. It was a big assignment of becoming the lead arranger of a large syndication deal. It was a maiden role as lead arranger of that particular bank. The officer finally closed the deal and completed necessary formalities of drawdown of syndicated loan. For this reason, the dealing officer had to work day and night.
Like in the 'The Old Man and the Sea', an experienced banker is the man from a remote village who struggled with honour to complete the hard deal of a milestone transaction for a small financial institution lacking origination competencies. He views himself as part of the institution doing the best thing in life at the end of his career without thinking of being defeated by uncertainties that might befall him.
The deal closure by him was a combination of team work and worthiness. Like in 'The Old Man and the Sea', a hero faces adversities while accomplishing hard jobs. "Man is not made for defeat....A man can be destroyed but not defeated." A successful career requires constant demonstration of one's worthiness through noble actions. Here is the combination of two successes: the outer, material success, and the inner, self-actualisation success, to do something exceptional for an institution. "If you are a leader, you should not just consume resources, but create as well." The experienced banker's contribution was significant to close the deal having many difficulties. It is said that wisdom lies not in the degree of knowledge acquired, but in its application. It is very true in completing such a deal successfully.
We may recall the famous story 'A Piece of Steak' by Jack London, the old archetypal story of the mature, experienced fighter struggling against an ambitious, powerful contender. Here, the experienced banker is compared to Tom King and the dealing officer is youth. The youth throws challenges. The combination of the two characters closed the syndication deal productively.
An insignificant amount was withdrawn to meet the necessary expenses for the upcoming deal-closure programme. The money was withdrawn by preparing a usual office note signed by relevant persons. The bank authorities debited (deducted) the money from the officers' salaries to adjust the 'amount', as it was not done before year-end closing.
During legal documentation, many complexities arise due to inadequate experience of legal counsels. Selection of the legal counsel was also biased which should be based on necessary experience. The legal counsel vetted documents for the first time, and as a result, the intricacies they had encountered could not be minimised without the expertise of the dealing officer of the host bank. The dealing officer had to stay at the legal counsel's office late into the night until the deal closure programme.
The decision to do the syndication deal was sudden. The dealing officer got mandate from the key promoter at late night. Overnight, the dealing officer had to approve terms sheet from the promoters and they had to float information memorandum within two weeks. There was inadequate manpower to handle such a big deal except the dealing officer. Moreover, there were strong 'groupings' among the officers and the executives who wanted that a good work should not be carried out without their involvement.
Proper assessment of working capital and loan amount was not enough. As a result, cost escalation occurred. It was structured in such a haste that the dealing officer could not assess the funding requirement properly. Follow-up and agency functions were not properly done as had been expected. Flexibility in facility agreement for working capital requirement for the borrower could be included. As a result, the project needs not take NOC for further borrowings, which is time consuming for the borrowers at a later stage. This was a first-time deal for the host bank and they have learnt a lot from the experience.
 Banks should not protect customers with umbrella on a sunny day, and remove umbrella during a rainy day. Bankers should always be customer-oriented. If customers survive in the long run, banks will survive.
However, the borrower was happy with the host bank as they had
finally completed the deal closure
successfully.
We should always keep our mind open for good things and ideas. We must remember, if we are headed in the right direction, each step, no matter how small, is getting closer to our goal.
The writer is a banker.
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