Atlas Mara is within a short crawl from snapping up majority stake in Union bank, after raising its stake in the tier-two lender to 49 percent.
This comes as the African investment vehicle of former Barclays boss, Bob Diamond, acquired an additional 1 percent stake or 280,956,166 shares of Union Bank.
Atlas Mara will issue 2,360,032 ordinary shares to fund the acquisition, the company said in a statement on its website, Tuesday.
Unity bank’s share price was up 0.85 percent to N5.90 Tuesday, according to Bloomberg data. The current share price values Atlas Mara’s 1 percent acquisition at N1.65 billion (USD $5 million).
At current market capitalisation of N241 billion, Atlas Mara’s total 49 percent shareholding in Union bank could be worth N118.2 billion (USD $386 million).
The deal also leaves Atlas Mara within about 2 percent of acquiring controlling stake in Union, at which point it could make a tender offer for the remaining shares not held by it.
The share price of Atlas Mara- listed on the London stock exchange- was down 2 percent to USD $2.45 Tuesday, valuing the company at $409.87 million.
“This is part of Atlas Mara’s strategy to fully takeover Union bank, which will give it more power to ring in changes at the bank,” a source familiar with the deal said.
Atlas Mara’s strategy with Union bank is similar to that employed by Standard Bank of South Africa which progressively increased its stake in Stanbic IBTC until it had acquired a commanding position.
Stanbic IBTC is a tier-one Nigerian lender that is majority owned by Africa’s largest bank by assets, Standard Bank of South Africa.
On 24 September 2007, IBTC Chartered Bank Plc merged with Stanbic Bank Nigeria Limited. Stanbic Africa Holdings Limited (SAHL) on behalf of Standard Bank tendered an offer to for the acquisition of additional IBTC shares in order to attain majority shares in the merged business.
This resulted in SAHL having a majority shareholding 50.75 percent up from 33.33 percent as at the merger date.
Atlas first bought a stake in Union from the Asset Management Company of Nigeria (AMCON) in 2012, and has progressively increased its holdings.
The Africa focused financial services holding company has often expressed willingness to take over Union, which would serve as an example of its Africa focused strategy working.
Atlas Mara Limited (formerly known as Atlas Mara Co- Nvest Limited), founded on November 28, 2013 by Bob Diamond and Asish Thakkar.
Atlas has over 1600 employees, an asset base of $2.5 billion and operations in 7 African countries namely Botswana, Zimbabwe, Tanzania, Mozambique, Rwanda and Nigeria.
Union Bank was founded in 1917 is one of Nigeria’s oldest commercial banks. The Asset Management Company of Nigeria (AMCON) injected N239 billion as capital into the bank in 2011.
Nigeria’s fragile economic recovery is showing up in the results of the country’s banks who are returning to profit after a torrid 2016, when the economy slipped into recession, its first in 25 years.
An improvement in unpaid loans, higher interest income from holding government debt and a rise in profit has helped lenders bolster their capital buffers.
The gross domestic product of Africa’s largest oil producer expanded 1.9 percent in the first three months of 2018, capping four straight quarters of expansion after a 1.6 percent full-year contraction in 2016.
An increase in crude prices and the introduction of a new foreign-exchange system that ended a crippling shortage of dollars helped attract more investment flows into the country, while improving liquidity for the nation’s lenders.
“Applications have been made for the New Shares to be admitted to the Official List of the UK Listing Authority and to trading on the London Stock Exchange (“Admission”). Admission is expected to become effective, and dealings in the New Shares are expected to commence on 27 June 2018,” Atlas Mara said in a statement on its website Tuesday.
The New Shares will rank pari passu with the existing ordinary shares, according to Atlas Mara.
