Former Barclays CEO takes 9.1% stake in Union Bank

Bob Diamond, former chief executive officer of Barclays Bank, UK, has acquired 9.1 percent of shares of Union Bank of Nigeria plc through Atlas Mara, his investment company.

This is following his acquisition of sub-Saharan African bank ABC Holdings Limited (BancABC) and ADC African Development Corporation AG, to the tune of $265 million in the first acquisition by his investment company.

The ADC, which trades in Frankfurt, owns 9.1 percent of Union Bank of Nigeria and 47.1 percent of BancABC which offers financial services in Bostwana, Mozambique, Tanzania, Zambia and Zimbabwe.

Last year, African Capital Alliance (ACA) led a consortium of international investors (Union Global Partners) to recapitalise Union Bank of Nigeria plc (UBN). The consortium invested $500 million for a controlling stake in the bank. ACA invested $75 million as part of the consortium.

Union Bank, the former Barclays Bank in Nigeria, has operated for nearly a century. The bank represents one of the most attractive industry opportunities, given its significant brand equity, robust client base and extensive retail infrastructure (about 400 branches). UBN offers the investor group a real opportunity for significant value-addition to a previously undermanaged asset, ACA said.

“We looked extensively at where the best opportunities would be in Africa and we had our sights on a high-qualified, multi-country bank in one of the regions of Africa,” Diamond told reporters in Gaborone, the capital of Bostwana. “We are not passive investors and we want to truly add value.”

Diamond, who quit as Barclays CEO in July 2012 after the British bank was fined for manipulating benchmark interest rate, and Uganda entrepreneur Ashish Thakkar raised $325 million in an initial public offering for Atlas Mara in December. The investment firm, to which Diamond and Thakkar committed $20 million of their own money, is looking for African financial-services companies that can help businesses manage currency and commodity risks.

Atlas Mara said it agreed to pay 82 cents a share for BancABC and offered 1.25 of its own shares for each one of ADC’s. Investors with 34.1 percent of ADC’s stock have agreed to tender their shares, it said, adding that the acquisition would be funded from the proceeds of the IPO.

BencABC started in Bostwana in 1956 and trades both in that country and on Zimbabwe’s stock exchange. Shareholders include Old Mutual plc (OML) and the International Finance Corporation, according to the lender’s website. Profit at BancABC rose 49 percent to 198 million pula ($22.5 million) last year, it said in a March 26 statement.

“Our objective is to build Africa’s premier financial-services group leveraging the access to capital, liquidity and funding that we at Atlas Mara can provide,” Diamond said in a statement. “I am delighted that we will be merging with such high quality organisations as BancABC and ADC.”

Atlas Mara will invest $100 million in BancABC after the transactions are completed, helping to boost the company’s capital-adequacy ratios, Douglas Munatsi, CEO of ABC Holdings, said in an interview in Gaborone.

“The country that gives us the highest returns will receive the most. Access to capital is part of what this transaction brings and I hope that from now the whole scenario of us being cash-hungry will change,” he said.

ADC said in September it planned to boost its southern African holdings to $500 million in the next two or three years.

“Atlas Mara founders and board share ADC’s vision of creating a pan-African banking group,” ADC CEO, Dirk Harbecke, said in a separate statement.

The deal will give Atlas Mara “a highly scalable growth platform across the Southern African Development Community” which has annual gross domestic product figure of over $640 billion, he said.

During his tenure as CEO, Diamond sought to boost Barclays’ profitability by combining its African operations with those of Absa Group Limited, the South African lender in which it acquired a majority stake in 2005. Last year Absa, now called Barclays Africa Group Limited (BGA), bought eight African units from its parent in an R18.3 billion all-share deal.

HOPE MOSES-ASHIKE, with wire report