Barely a day after Nigeria’s Securities Commission ratified Union Bank Plc’s bid to raise fresh capital via a rights issue, its leading shareholder, Bob Diamond’s Atlas Mara, says it has raised a fresh $200 million to bolster the bank and take it to newer heights.
During the offer period which should begin in weeks, 12.1 billion ordinary shares of 50 kobo each, will be available at N4.10 per share, on the basis of five new shares for every seven shares held, according to a statement by the bank.
Analysts say the ambitions of Bob Diamond to build a top tier Nigerian bank are taking shape, after the sale of a stake in Atlas Mara Ltd. gave him enough cash to make acquisitions in Africa’s most populous nation.
Commenting on the SEC approval, Emeka Emuwa, Union Bank’s Chief Executive Officer, said, “the approval by the Securities and Exchange Commission brings us to the final stages of this important transaction for Union Bank which is critical to our short to medium term business objectives. The capital raised from the rights issue will support our strategy to accelerate business growth and position Union Bank as a leading commercial bank in Nigeria.”
Bloomberg reports that Atlas Mara completed the sale of 42 percent to Fairfax Africa, through issuing new shares and a convertible bond, the lender said in a statement on Friday. The proceeds, which the company estimated in June will amount to $200 million, will be used to boost Atlas Mara’s holdings in Union Bank of Nigeria Plc and expand its markets, treasury and financial technology businesses, it said.
“This transaction puts Atlas Mara in a very strong position to deliver on our strategic goals,” Diamond, Atlas Mara’s chairman, said in a separate statement. A spokesman for the company couldn’t immediately respond to emailed questions.
Atlas Mara plans to increase its interest in UBN, its largest investment, to about 45 percent from 31 percent, of which only 22 percent is held directly. Once done, it will approach development finance institutions to bolster the Lagos-based lender’s capital levels, Atlas Mara said in a prospectus last month. From 2019, it will seek to scale up UBN’s operations by expanding existing businesses and making acquisitions, the document showed.
Atlas Mara, which bought stakes in banks across seven African countries after an initial public offering at the end of 2013, has struggled to grow profit, as currencies across the continent weakened, amid a commodities rout and economic growth slowed.
To boost earnings, Atlas Mara has also turned to currency trading. The lender expects to get approval from the Dubai Financial Services Authority in the fourth quarter, to develop its markets and treasury operations in the United Arab Emirates, the company said in the prospectus. The business caters to clients who “either have or want exposure to African rates and currencies,” Atlas Mara said.
The stock rose 2 percent to $2.50 by noon in London, extending gains this year to 33 percent and giving the company a market value of $418 million. The securities are heading for their first annual advance in four years.
