Diamond to sell 35% to Fairfax Africa Holdings

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Published Jun 21, 2017

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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.”

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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 

 

 

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