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.
The firm has progressively increased its stake in the lender since acquiring a 20% stake from the Asset Management Company of Nigeria (AMCON) in 2012.
Prior to the rights issue by Union Bank in 2017, Atlas had a 42% stake in the bank. After its conclusion, it then purchased additional shares bringing its total holding to 48%. The current acquisition takes it to 49%.
In 2017, it spent $55 million on acquiring a 13% stake in Union bank from the Clermont group. The Clermont Group is part of the UGPL consortium that bought a majority stake from AMCON in 2012.
Mode of funding
The Company will issue 2,360,032 ordinary shares as consideration for the Union Bank shares acquired.
Atlas had also issued new shares to enable it take up its stake in last year’s issue.
Could a take over be near?
Atlas is 1% shy from the 50% point. At that point, it would have to make a mandatory tender offer to minority shareholders.
The Investment and Securities Act (ISA) states that a company which increases its stake beyond 30% must do an MTO. A company holding between 30%-50%, which increases its stake, must also carry out an MTO.
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 1,600 employees, an asset base of $2.5 billion and operations in 7 African countries namely Botswana, Zimbabwe, Tanzania, Mozambique, Rwanda and Nigeria.
Union Bank, 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.
Then Central Bank of Nigeria (CBN) Governor, Lamido Sanusi, in August 2009 removed the Chief Executive Officer (CEO) of the bank, Barth Ebong, alongside four others. Sanusi hinged his action on high level of non-performing loans and poor corporate governance. Funke Osibudu was subsequently appointed acting CEO.
Union Bank shares are currently trading at N5.85 in today’s trading session on the Nigerian Stock Exchange (NSE) down 0.85%.
Results for the first quarter ended March, 2018, show gross earnings increased from N33.84 in 2017 to N39.46 in 2018. Profit before tax also rose from N4.6 billion in 2017 to N5.4 billion in 2018. Profit after tax surged massively from N4.5 billion in 2017 to N5.2 billion in 2018.
(Nairametrics)
