Bob Diamond’s Atlas Mara interested in Barclays Africa takeover

Atlas Mara in talks with consortium of investors about potential merger

Richard Partington
Tuesday 26 April 2016 15:26 BST
Comments
Former Barclays boss Bob Diamond is back on the deal trail
Former Barclays boss Bob Diamond is back on the deal trail

Atlas Mara, the finance company co-founded by former Barclays Chief Executive Officer Bob Diamond, said it’s held talks with investors on a potential bid for the UK lender’s operations in Africa to boost its presence across the continent.

Diamond’s New York-based private-equity vehicle Atlas Merchant Capital and the Mara Group, founded by his partner at Atlas Mara, Ashish Thakkar, are among the group that’s also exploring a combination of Atlas Mara with Barclays Africa, the London-traded company said in a statement on Tuesday. No other investors were identified. Carlyle Group is working with Diamond, people familiar with the matter said on Monday.

A combination with Barclays’s Africa Group would rapidly accelerate Atlas Mara’s growth plans and give Diamond control of operations he championed as the CEO of the British lender before exiting after the Libor scandal. Started in 2013 by Diamond and Ugandan entrepreneur Thakkar to consolidate African financial-services firms, Atlas Mara has made acquisitions in seven sub-Saharan countries from Botswana to Nigeria, with plans to expand that to 10 to 15 markets over the next few years.

“There will be some people who would be slightly nervous about selling a business to somebody who was an insider before,” Piers Hillier, who helps to oversee about $123 billion of assets including Barclays shares as chief investment officer of Royal London Asset Management said in an interview with Anna Edwards on Bloomberg TV. “We’d want to see not just one candidate, who’s effectively a former insider, as the only available candidate to purchase. It doesn’t tend to mean you’re going to be able to secure the best price.”

Explore Potential

Atlas Mara said its board of directors “supports the exploration of the potential combination,” of the company with Barclays’s African operations. Diamond and Thakkar will “recuse themselves” from the firm’s internal discussions over the potential approach and remain “wholly committed to Atlas Mara and the execution of its strategy.”

Barclays CEO Jes Staley announced on March 1 the bank was retreating from Africa and selling down its 62 per cent holding as it seeks to boost its capital ratios and focus on US and UK operations. Staley is preparing to sell an initial 10 per cent stake in the Johannesburg-based business to several large investors, while keeping the option to divest its entire holding, people familiar with the matter have said. Officials at Barclays in London and Johannesburg declined to comment on Atlas Mara’s statement.

“The fact that a consortium led by Atlas Mara is interested in acquiring Barclays’ stake does not come as a surprise to us,” said Gary Greenwood, an analyst at Shore Capital in Liverpool, England with a buy rating on Barclays shares. “If an agreement can be reached, this could present a relatively clean exit for Barclays that would, depending on price, be modestly capital accretive.”

Staley has said Diamond lacks the “financial capability” to buy the whole of Barclays Africa Group. The African lender has a market value of 121 billion rand ($8.3 billion), according to data compiled by Bloomberg. South Africa’s Public Investment Corp., the biggest money manager on the continent, holds 5.3 per cent.

‘Building Blocks’

Atlas Mara’s pretax profit was $19.2 million last year, compared with a loss of $58 million in 2014, the company said in a separate statement on Tuesday. Lending increased 15 per cent to $1.2 billion, while deposits rose 12 per cent to $1.4 billion.

The company said it was about half way through a $10 million stock repurchase program started in October after the stock almost halved last year amid a reversal of the commodities boom that made Africa the last great growth frontier.

The stock gained 15 per cent to 4.70 pence at 10:29 a.m. in London trading on Tuesday. It has fallen about 10 per cent this year.

“Despite a challenging economic backdrop, we are pleased to have declared our first annual profit,” Chairman Arnold Ekpe said in the statement. “Strategically, the building blocks are falling into place and I fully expect that 2016 will demonstrate further progress on our journey towards building sub-Saharan Africa’s premier financial institution.”

The firm includes several former Barclays executives, including its former Africa CEO John Vitalo, who now leads Atlas Mara for Diamond and Thakkar. Others include former head of Africa markets Michael Christelis, who joined Atlas Mara as head of treasury and markets in August, and former corporate banker and ex-UBS Group AG banks analyst John-Paul Crutchley, who runs investor relations.

© 2016 Bloomberg L.P

Join our commenting forum

Join thought-provoking conversations, follow other Independent readers and see their replies

Comments

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged inPlease refresh your browser to be logged in