Atlas Mara, Bob Diamond’s pan African investing vehicle could witness a shake-up as shareholders kick against his position of Chairman. Atlas Mara owns stakes in several banks across Africa including tier two lender Union Bank.
Atlas Mara has progressively increased its stake in the tier two lender, and Diamond has never hidden his desire to take control of the bank. Atlas Mara currently has a 48% stake.
The issues at hand
- Two shareholder advisory groups have raised a red flag concerning Bob Diamond occupying the office of chairman. Glass Lewis, one of the groups asked shareholders to vote against Diamond’s re-election as chairman.
- Both have however requested current investors be given a right of first refusal when the company decides to sell 15% of its shares.
- Apparently, UK laws require that the Chairman of the board be an independent non-executive director.
- Atlas Mara has however stated that the board’s composition had no issue and Diamond’s presence was necessary for it to meet its objectives.“We take governance very seriously and have constructed the right board to achieve our objectives for the bank and our shareholders.
Why this matters
- Bob Diamond is a key player in Atlas Mara. It was his idea to start an investment company that would invest in Africa’s rapidly growing banking sector. This was the basis for his acquisition of majority stake in Nigeria’s Union Bank.
- If he is relieved of the position as Chairman, it might affect Atlas Mara’s agility at further acquisitions. As Atlas Mara explained, “Bob Diamond’s continued leadership at the board is important to delivering on our business plan and performance objectives.”
- Bob Diamond needs all the control he needs to make nimble moves in his Africa focussed company. Being removed as Chairman could alter the trajectory of his acquisitions.
- Bob Diamond does not sit on the board of Union Bank.
Should Union Bank Shareholders be worried
- On the face of it, this appears to be an internal issue and could be resolved quickly. We do not see any immediate effect on Union Bank and its shares.
- Atlas Mara has over the last few months increased its shareholdings in Union Bank and now owns about 49% of the company.
- Bob Diamond’s plan is to go past the 50% mark and perhaps take the bank private.
- The trajectory of the share price could move upwards ahead of a potential MTO.
Latest News on Atlas Mara
In a notice sent to the London Stock Exchange (LSE), Atlas Mara, the Pan African banking vehicle set up by Bob Diamond, announced it had acquired an additional 1% stake in tier two lender, Union Bank. This amounts to 280,956,166 shares. There was no disclosure on which investors the shares were bought from. Private equity firm, African Capital Alliance (ACA) also owns a stake in the bank.
Union Bank closed at N5.55 on Friday’s trading session on the Nigerian Stock Exchange, unchanged from the prior day. Year to date, the stock is down 28.35%
Results for the half year ended June 2018 show gross earnings increased from N72 billion in 2017 from N83 billion in 2018. Profit before tax increased from N9.4 billion in 2017 to N11.8 billion in 2018. Profit after tax increased from N9.2 billion in 2017 to N11.4 billion in 2018.
Atlas Mara Limited (formerly known as Atlas Mara Co- Nvest Limited), founded on November 28, 2013, by Bob Diamond and Asish Thakkar is an Africa focused financial services holding company. 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.
