Atlas Mara, the company co-founded by former Barclays plc head Bob Diamond, plans to sell a 35% stake to Fairfax Africa, to help fund the purchase of a larger stake in a Nigerian bank.
Atlas Mara will raise $200m selling new shares to existing shareholders and Fairfax Africa and by issuing a convertible bond to the Toronto-based investment company, Atlas Mara said in a statement on Wednesday. London-listed Atlas Mara also agreed to acquire an indirect 13.4% shareholding in Union Bank of Nigeria from the Clermont Group for $55m, which will raise its effective stake in the Lagos-based lender to 44.5%.
“A strategic partnership with Fairfax Africa creates a strong relationship between two like-minded, long-term investors in Africa,” Atlas Mara said. “Each is focused on capitalising on the long-term growth potential of Africa, and provides permanent capital to support growth.”
Union Bank has been Atlas Mara’s single biggest investment in Africa since Diamond started it in 2013. After the oil price slumped and Nigeria’s economy contracted, Union Bank’s profit dropped in 2015 and, along with other lenders in the West African nation, it found in 2016 that it needed to raise capital.
Fairfax Africa agreed to buy $100m of new shares at a price of $2.25 apiece, representing an implied purchase price of 0.33 times book value, the company said in a separate statement. Atlas Mara’s stock has traded at an average this year of $2.26, according to data compiled by Bloomberg. The shares fell 0.5% to $2.50 as of 8.21am in London, giving the company a market value of $194.5 million.
The partnership with Fairfax Africa, which has investment holdings across Africa, will give the company four directors on Atlas Mara’s board, while a new management incentive plan will be put in place, Atlas Mara said. Diamond will continue as Atlas Mara’s executive chairman.