Bob Diamond’s Atlas Mara is selling 35% of its stake to Fairfax Africa Holdings to increase its stake in Union Bank of Nigeria (UBN) from 31% to 44.5%. The firm expects to raise $200m from selling new stock to existing shareholders and Fairfax Africa. Atlas Mara’s market value has dropped almost 80 percent since an initial public offering in December 2013 and Union Bank, its single biggest investment in Africa, is Nigeria’s worst-performing bank stock this year.
Atlas Mara intends to use the proceeds to:
- fund its acquisition of an indirect 13.4% shareholding in UBN;
- its subscription for its pro rata entitlements under the forthcoming rights issue announced by UBN; and
- the expansion of its strategic business lines of Markets and Treasury and FinTech.
“We share the vision of Atlas Mara to create a leading pan-African financial services platform in key growth markets in sub-Saharan Africa,” said Michael Wilkerson, Chief Executive Officer of Fairfax Africa, “We are delighted to enter into this strategic partnership with Atlas Mara, and to help strengthen and grow its existing and profitable network across seven countries in Africa. We believe this attractive investment represents substantial value creation potential for Fairfax Africa shareholders, and we look forward to working closely with Bob Diamond and the Atlas Mara team to successfully build upon the foundation laid over the past three years.”
“We believe strongly in the long-term growth of good businesses in Africa”, said Prem Watsa, Chairman of Fairfax Africa, “Banks are at the forefront of economic development in sub-Saharan Africa and 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 would give Fairfax four of the nine seats on Atlas Mara’s board.
A new management incentive plan would be put in place, while Diamond would continue as Atlas Mara’s executive chairman, the company said.
