At­las Mara wants a big­ger stake in Nige­rian bank

The Star Early Edition - - BUSINESS REPORT - Re­nee Bonorchis

AT­LAS Mara, the com­pany co-founded by for­mer Barclays head Bob Di­a­mond, plans to sell a 35 per­cent stake to Fair­fax Africa Hold­ings so it can in­crease its stake in a Nige­rian bank.

At­las Mara will raise $200 mil­lion (R2.6 bil­lion) sell­ing new shares to ex­ist­ing share­hold­ers and Fair­fax Africa and by is­su­ing a con­vert­ible bond to the Toronto-based in­vest­ment com­pany, At­las Mara said yes­ter­day.

Lon­don-listed At­las Mara also agreed to ac­quire an in­di­rect 13.4 per­cent share­hold­ing in Union Bank of Nige­ria from the Cler­mont Group for $55m, which will raise its ef­fec­tive stake in the Lagos-based lender to 44.5 per­cent.

“A strate­gic part­ner­ship with Fair­fax Africa cre­ates a strong re­la­tion­ship be­tween two like-minded, long-term in­vestors in Africa,” At­las Mara said. “Each is fo­cused on cap­i­tal­is­ing on the long-term growth po­ten­tial of Africa and pro­vides per­ma­nent cap­i­tal to sup­port growth.”

Union Bank has been At­las Mara’s sin­gle big­gest in­vest­ment in Africa since Di­a­mond started the com­pany in 2013. The Nige­rian lender is the coun­try’s worst-per­form­ing bank stock this year, hav­ing an­nounced in Novem­ber that it plans a rights is­sue to boost its cap­i­tal lev­els as the coun­try’s smal­land mid-sized len­ders strug­gled to cope with a con­trac­tion in the econ­omy of Africa’s big­gest oil pro­ducer.

At­las Mara, which has in­vest­ments in banks across seven African coun­tries, has lost al­most 80 per­cent of its value since an ini­tial pub­lic of­fer­ing in De­cem­ber 2013 as growth across the con­ti­nent slowed and cur­ren­cies weak­ened, hurt­ing profit con­verted back into dol­lars. Di­a­mond, 65, in Fe­bru­ary ousted chief ex­ec­u­tive John Vi­talo and pledged to cut an­nual op­er­at­ing costs by $20m af­ter ex­penses en­gulfed in­come and threat­ened the com­pany’s abil­ity to ex­pand through ac­qui­si­tions.

Fair­fax Africa agreed to buy at least 30 per­cent of the $100 mil­lion of new shares at a price of $2.25 a share, rep­re­sent­ing an im­plied pur­chase price of 0.33 times book value, the com­pany said. At­las Mara’s stock has traded at an av­er­age this year of $2.26, ac­cord­ing to data. The shares traded at $2.50 as of 9.02am in Lon­donyes­ter­day.

“Banks are at the fore­front of eco­nomic de­vel­op­ment in sub-Sa­ha­ran Africa,” Prem Watsa, Fair­fax Africa’s chair­per­son, said. “At­las Mara rep­re­sents a unique op­por­tu­nity to in­vest in many profitable banks in the re­gion at a very at­trac­tive val­u­a­tion.”

The part­ner­ship with Fair­fax Africa, which has in­vest­ment hold­ings across Africa, will give Fair­fax four direc­tors on At­las Mara’s board.

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