With operations in 7 different countries and $2.6 billion dollars in asset, it appears Atlas Mara is fed up at last. The sub-Saharan bank, founded by ex-Barclays Plc chief, Bob Diamond says it is moving out of its operations in Zambia, Rwanda, Mozambique and Tanzania, just for a 6.27 percent stake in Nairobi-based Equity Group Holdings Plc, the second biggest bank in Kenya by asset. The deal is going to take the nature of a swap, meaning that Equity Group of Kenya would now take over operations in those countries Atlas Mara has exited.
The Transaction is Worth About $106 Million
Equity Group said it would issue 252,482,300 new shares, representing 6.27 percent of its expanded share capital in consideration of the shares Atlas Mara owns in the target banks.
“This implies that the monetary value of the consideration to be paid is the equivalent of 10.7 billion shillings (equivalent to approximately $105.4 million),” Equity said.a
Details of The Deal
In a statement released by Equity Group Holdings, the deal with Atlas Mara include:
- A 62 per cent of the share capital of Banque Populaire du Rwanda
- 100 per cent of the share capital of African Banking Corporation Zambia,
- 100 per cent of the share capital of African Banking Corporation Tanzania and;
- 100 per cent of the share capital of African Banking Corporation Mozambique.
- Atlas Mara will then become a shareholder in Equity Group Holdings in Kenya.
- The transaction will be arranged by Stanbic Bank Kenya and Anjarwalla & Khanna, the largest corporate law firm in east Africa.
- The deal is subject to regulatory approvals in the various countries and once finalized, Atlas Mara would become one of Equity’s shareholders, it said.
Equity Group hopes the deal will give it the room to expand its footprint in Africa.
“Board of Directors have agreed to the entry into a binding term sheet through a share swap to exchange certain banking assets of Atlas Mara in four countries for shares in Equity Group,” said James Mwangi, Equity Group Holdings CEO.
End of The Road For Atlas Mara?
Hard as it may seem, Atlas Mara, which completed four acquisitions in 2014 alone, would now see a major reorganization. Mr. John Staley, the bank’s Chief Executive Officer would be stepping down to pursue other interests, after a review of the bank’s business showed it has struggled to contain costs that engulfed income and its share price plummeted more than 80 percent since being listed in London at the end of 2013.
The bank faces much stronger and bigger lenders in the seven African nations where it operates, and also received criticism for overpaying for some acquisitions.
After this, the Atlas Mara executive team would all proceed to Chairman Michael Wilkerson, who also chairs Fairfax Africa Holdings Corp., which holds 49 percent of Atlas Mara after injecting funds into the company, for further directions.
Getting a stake in Equity Group would mean Atlas Mara becomes a meaningful shareholder in “one of Africa’s most successful and well-run banks,” the company said.
Charles Rapulu Udoh
Charles Rapulu Udoh a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organisations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution and data analytics both in Nigeria and across the world.