Bob Diamond's Atlas Mara May Combine With Barclays Africa -- 2nd Update
April 26 2016 - 1:41PM
Dow Jones News
By Margot Patrick and Matina Stevis
Bob Diamond's Atlas Mara Ltd. on Tuesday said it could combine
with Barclays Africa if a consortium considering buying the African
arm of Barclays PLC succeeds.
The potential purchase would turn Africa banking group Atlas
Mara into a major brand in South Africa and more than a dozen other
countries, and revive its prospects after a rocky two years that
saw its share price halve.
"Our ambition when we started [Atlas Mara] was to build the
leading, premier financial institution in sub-Saharan Africa," Mr.
Diamond said in an interview with The Wall Street Journal Tuesday.
"If a transaction like this [the acquisition of Barclays Africa]
was to happen, it would just accelerate our strategy in one swoop,
giving us more countries and a larger platform," he added.
Atlas Mara said the combination of Atlas Mara with the much
larger Barclays Africa would be backed by investors including
investment companies of its co-founders, Mr. Diamond's Atlas
Merchant Capital and Ashish Thakkar's Mara Group. The Wall Street
Journal and other media reported Sunday that Atlas Merchant Capital
had teamed up with U.S. buyout firm Carlyle Group to put together a
bid for Barclays Africa, which has a market cap of $8.3
billion.
Mr. Diamond and Mr. Thakkar co-founded Atlas Mara in 2013 to
raise shares on the London Stock Exchange and build a sub-Saharan
Africa bank. Backed by U.S. shareholders, Atlas Mara bought assets
in countries including Nigeria, Zambia and Rwanda, but struggled to
gain traction as investors soured on emerging markets and its
shares sank. Atlas Mara's assets are around $2.4 billion, compared
with Barclays Africa's $75 billion in assets.
Meanwhile, Mr. Diamond's other main vehicle, Atlas Merchant
Capital, has been looking for purchases after raising around $260
million, but its focus has been on developed markets. Mr. Diamond
is a former chief executive of Barclays and helped lead the British
bank's push into Africa in the 2000s. He left Barclays in 2012
after the bank entered a settlement over alleged interest rate
rigging.
Barclays last month announced it would sell its 62.3% stake in
Barclays Africa, after deciding it didn't fit its strategy and
burned up too much capital. Barclays Africa owns 12 banks across
Africa, the biggest of which by far is South Africa-based Absa, one
of the country's largest lenders.
Atlas Mara appeared to be a natural purchaser, but it was hard
to see how it could raise billions of dollars when its market cap
is less than $300 million.
Analysts believed that Barclays PLC would retain a roughly 20%
non-controlling stake in Barclays Africa, but Mr. Diamond said the
bid he was putting together with Carlyle would be for the whole
chunk held by his London-based former bank.
He didn't want to divulge any further details about who was in
the consortium, but said that it has amassed "committed long-term
strategic investor, this is not private equity this is permanent
capital."
Mr. Diamond and Atlas Mara chief executive, John Vittalo, who
previously served as CEO of Barclays Africa, said in the interview
that Atlas Mara's investment thesis remains attractive despite the
fact that several African economies are losing steam, because of
lower oil and mineral prices and the Chinese industrial
slowdown.
"Now is the time to press ahead even more aggressively for
acquisitions, " Mr. Vitalo said. "These economies are seeing
headwinds; but there are headwinds today and the long-term thesis
is absolutely intact," he added.
Zambia, where Atlas Mara agreed to purchase Finance Bank of
Zambia late last year, has seen its economy collapse over the past
year because of diminished Chinese demand in its key export,
copper. In the course of 2015 the local currency, the kwacha, lost
half its value against the dollar.
Mr. Thakkar, a 34-year-old England-born Ugandan who sometimes
advises African heads of state, and Mr. Diamond, the 64-year-old
American who became the face of Britain's post-financial-crisis
banking scandals, set up Atlas Mara shortly after meeting at a
dinner party in 2013. Mr. Diamond and Mr. Thakkar, both Atlas Mara
directors, won't be part of any potential talks with the consortium
about a merger, Atlas Mara said.
Atlas Mara shares rose more than 4% in London and Barclays
Africa shares closed 0.7% higher in Johannesburg.
--Ian Walker contributed to this article.
Write to Margot Patrick at margot.patrick@wsj.com and Matina
Stevis at matina.stevis@wsj.com
(END) Dow Jones Newswires
April 26, 2016 13:26 ET (17:26 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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