Johannesburg - 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 selling new shares to
existing shareholders and Fairfax Africa and by issuing a convertible bond to
the Toronto-based investment company, Atlas Mara said in a statement on
Wednesday.
London-listed Atlas Mara also agreed to acquire an indirect
13.4 percent shareholding in Union Bank of Nigeria from the Clermont Group for
$55 million, 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
capitalizing on the long-term growth potential of Africa
and provides permanent capital to support growth.”
Read also: Grace Mugabe and the R17m diamond ring saga
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 it plans a rights issue to boost its capital
levels as the country’s small- and 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 Officer John
Vitalo and pledged to cut annual operating costs by $20 million 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 apiece, representing an implied
purchase price of 0.33 times book value, the company said in a separate
statement. Atlas Mara’s stock has traded at an average this year of $2.26,
according to data compiled by Bloomberg. The shares fell 0.5 percent to $2.50
as of 9:02 a.m. in London,
giving the company a market value of $194.5 million.
“Banks are at the forefront of economic development in
sub-Saharan Africa,” Prem Watsa, Fairfax
Africa’s chairman, said in the statement. “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, while a new management incentive plan
will be put in place, Atlas Mara said. Diamond will continue as Atlas Mara’s executive
chairman.
BLOOMBERG