Diamond’s plans to put a shine on Barclays Africa
Former CEO’s Atlas Mara group confirms it is part of consortium bidding for banking assets
FORMER Barclays CEO Bob Diamond envisages combining his Atlas Mara group’s banking operations in seven African countries with those of the consortium that is bidding to take control of Barclays Africa Group (Absa), if the deal goes ahead.
Diamond emphasised this week that his grouping had the advantage and would not run into the global regulatory challenges that prompted UK-based Barclays plc to exit its African operations.
Atlas Mara this week put an end to weeks of speculation about Diamond’s possible involvement in a bid for all or part of Barclays plc’s 62.3% stake in Barclays Africa Group when it confirmed that Diamond’s Atlas Merchant Capital and his partner Ashish Thakkar’s Mara group were part of a consortium bidding to buy the entire stake.
The funding for the consortium’s bid is already in place, and it is permanent capital from long-term strategic investors, rather than private equity capital, Diamond and Atlas Mara CEO John Vitalo said in an interview on Wednesday followthose ing the release of Atlas Mara’s year-end results.
Atlas Mara, which was founded by Diamond and Thakkar in 2013 after Diamond left Barclays plc in the wake of the Libor (London interbank offered rate) rigging scandal, also confirmed that it was in talks to merge its own banking operations with of the consortium.
Diamond and Vitalo, who was also a former Barclays executive, declined to provide further details of how the deal and the merger might be structured.
Barclays plc CEO Jes Staley told the Times (of London) last week that there had been “interest expressed [by] a number of parties” in the business.
UK media have speculated that there has been interest from financial institutions in China, elsewhere in Asia and the Middle East.
In South Africa, the Public Investment Corporation has also expressed interest in funding the acquisition of a stake in Barclays Africa.
Dan Matjila, the CEO of the PIC, told Business Times a few weeks ago that there were “behind-the-scenes” talks among local business people about buying a 10% stake in Barclays Africa.
However, Diamond’s consortium is unusual among the potential global bidders for Barclays Africa as it would not run into the global regulatory challenges which Barclays plc and other global banking groups are increasingly facing because regulators have increased the capital that banks have to hold against risk if they are operating across continents.
When it shocked the market earlier this year by announcing it wanted to offload its stake in Barclays Africa Group, Barclays plc explained that the more demanding capital rules meant that it had to hold 100% of the risk capital for its African operations but earned only 62.3% of the return.
Atlas Mara has majority stakes in banking operations in seven countries in sub-Saharan Africa and its aspiration is to become Africa’s premier financial institution.
“We will remain an Africafocused banking group — we are not going to operate across continents,” Vitalo said, adding that where previously global groups such as Citigroup and Barclays had derived capital synergies from banking across continents, now they were seeing “capital dys-synergies”.
“The most efficient way to run a sub-Saharan bank now is to be a sub-Saharan business,” said Diamond, who added that he was bullish on Africa and South Africa in the medium to long term, despite the short-term growth challenges, and was excited at the unexpected opportunities to buy into South Africa that had opened up with Barclays plc’s decision to sell down its Barclays Africa stake and Old Mutual’s decision to demerge.
“At the time John [Vitalo] and I formed Atlas Mara, we never expected that we would be able to get into South Africa, where the banking sector has consolidated and earnings multiples are high,” he said.
Atlas Mara turned from loss to profit in the latest financial year, which was its first as an integrated group following a string of acquisitions.
It wanted to be a “banking group — not a group of banks”, Vitalo said, and it was busy restructuring itself as a regulated-bank holding company — he would not say in which jurisdiction it would be regulated.
Consortium is unusual as it would not run into regulatory challenges