In the fall of 2015, a South African construction company (”Construction Co”) reached out to us about issuing a Bank Guarantee on their behalf. Shortly before, a South African government body submitted a Request for Proposals to contractors in South Africa – the project was for construction of a new office building. Construction Co had the ability to complete this project and planned to submit a proposal but the government required a bond or guarantee to accompany any proposal.
Despite its ability to complete the project, Construction Co did not have the capital to put up for a bid bond of 800,000 ZAR which was necessary for the government to accept their proposal. Such a bond requires a 100% collateral deposit. To obtain adequate funds for the deposit, Construction Co’s owner, Winston tried to take out a loan for 800,000 ZAR. Despite the straight forward nature of the project, Winston’s requests were denied because he lacked sufficient credit history. Speaking with the government project leaders, Winston learned that they would accept a partial payment or deposit of 30% if Construction Co could provide a guarantee from a reputable bank.
After some research, Winston reached out to us looking for a guarantee. Having worked on many projects like this in the past, we knew we could help Winston win the request. After proper due diligence, we issued Construction Co a Guarantee from a top bank. Using this instrument to meet the government’s requirements for proposals, Winston was able to secure the project for his company. Satisfied with our services, he returned to us several times for Guarantees and Documentary Letters of Credit to finance Construction Co’s projects.