Diamond's Atlas Mara to raise US$200m in revival plan

LONDON, June 21 (IFR) - Bob Diamond’s African investment vehicle Atlas Mara said it is raising US$200m from Fairfax Africa and existing shareholders to kick-start the bank after a tough three years since listing.

Atlas Mara, which has been buying up banking assets with the aim of becoming the leading bank in Africa, plans to sell US$100m of new shares to Fairfax Africa and existing investors, and sell US$100m of mandatory convertible bonds to Fairfax.

Fairfax Africa will invest at least US$130m and up to the full US$200m, which will give it a stake of between 35% and just below 50% in Atlas Mara.

“With Fairfax, we are now better positioned to achieve our full potential and to benefit from the long-term trends we see in Nigeria and sub-Saharan Africa,” said Diamond, the former Barclays CEO who is executive chairman of Atlas Mara.

Proceeds will be used to raise Atlas Mara’s stake in Union Bank of Nigeria to 44.5% from 31.1%, and to invest and scale up the markets and treasury and fintech business, the company said.

The new shares will be offered at US$2.25 per share, a 10% discount to Tuesday’s closing price. Fairfax will take 30% of the shares and any more not bought in the offer.

The US$100m mandatory convertible bonds will convert into shares at US$2.25 when the share offer completes.

Citigroup is advising on the deal.

Fairfax Africa is part of Canadian investment firm Fairfax Financial, led by Prem Watsa, to invest in African assets.

It will nominate four out of Atlas Mara’s nine board directors.

Atlas Mara will spend US$55m on buying the extra 13.4% in UBN from the Clermont Group. It will spend more to maintain its stake in UBN in a planned rights issue, and is expected to increase the holding to a majority in the future.

Diamond built up Barclays’ investment bank over more than a decade and was CEO for 18 months until he was ousted in July 2012 following the British bank’s fine for rigging Libor interest rates.

He subsequently teamed up with Africa-based entrepreneur Ashish Thakkar to set up Atlas Mara at the end of 2013, and is now running the business after the departure of John Vitalo as CEO in February.

Atlas Mara’s London-listed shares have fallen to US$2.50, a quarter of the US$10 they listed at in the IPO.

The company raised US$325m in its IPO and has raised another US$313m in two follow-ons and US$69m from two convertible bond sales, and raised debt.

It has bought businesses to build a platform in Botswana, Mozambique, Tanzania, Zambia, Zimbabwe and Rwanda, but it has struggled to cut costs and increase revenues. (Reporting by Steve Slater)