- More than 90% of investors vote in favour of Fairfax deal despite dilution
Bob Diamond, co-founder of Atlas Mara, on Friday welcomed the strong backing from investors to sell more than a third of the African banking investment vehicle to Canada’s Fairfax Financial.
“This means we have secured a $200m capital injection to invest in sub-Saharan Africa. I feel terrific,” Mr Diamond told the Financial Times. “This is a very strong partner, which has resounding support from shareholders.”
He made his comments after more than 90 per cent of investors voted in favour of the sale.
The deal, which will partly fund Atlas Mara’s investment in a Nigerian bank, leaves existing investors in the London-listed vehicle facing painful dilution, including Janus Capital, Wellington Management, Guggenheim and Mr Diamond himself.
However, the former Barclays’ chief executive — nicknamed “Bobtimistic” by former colleagues — remained resolutely upbeat, saying: “Investors are pretty excited. We are now able to get to the next stage of our Nigerian investment at a very low price.”
Atlas Mara will use some of the money to increase its holding in Union Bank of Nigeria. It plans to buy an indirect 13.4 per cent shareholding in UBN, taking its combined direct and indirect holdings in the Lagos-based bank to 44.5 per cent.
UBN plans to raise capital via a share issue later this year, which could allow Atlas Mara to increase its stake above 50 per cent. Taking control of UBN’s N1.3tn ($4bn) of assets would more than double Atlas Mara’s $2.7bn balance sheet.
This means we have secured a $200m capital injection to invest in sub-Saharan Africa. I feel terrific
Mr Diamond said it was a “great time” to buy a mid-sized Nigerian bank even though the country has been hit by its worst economic slowdown since 1991 after the collapse in oil prices in mid-2014 sparked a fiscal crisis.
“We are going to get in to one of Nigeria’s best banks with the total stake having cost less than 50 per cent of book value,” he said, adding that there were “green shoots” in Nigeria, citing a recent uptick in oil production and an oversubscribed sovereign bond issue.
“I think we will look back in a few years and say: ‘Can you believe we were able to get a majority stake in a major Nigerian bank for anything less than book value, never mind a significant discount’,” said Mr Diamond, who plans to visit Nigeria after the summer.
Atlas Mara, which has suffered an 80 per cent fall in its share price since its 2013 listing, plans to raise $100m through an offering of new shares, and a further $100m through the issuance of a mandatory convertible bond to Fairfax.
Fairfax, which is run by Canadian investor Prem Watsa, will also have the right to secure a minimum of 30 per cent of the share offering, and will subscribe for any stock not taken up by existing shareholders.