African banking investor Atlas Mara Ltd said on Wednesday, that it will increase its focus on its core markets and digital banking assets as it looks to acquire a stake in a South African agricultural bank.
Meanwhile, co-Founder Bob Diamond will step down as chair and return to a non-executive director role amid a number of board changes.
Atlas Mara explained it was undertaking a “review of strategic options” which will see it assess external interest for some of its banking assets. The review will be led by Citigroup Global Markets Ltd.
In doing so, Atlas Mara plans to continue to focus on its investments in core markets “where a path to market leadership is clearly achievable”. For non-core markets, it will seek to “partner, exit or reduce risk exposure”.
In other strategic priorities, Atlas Mara will look to accelerate its agricultural finance platform given the importance of the sector to African economies. The firm emphasised, for instance, that 20% of the economy of its largest market, Nigeria, was agriculture.
As part of this, Atlas Mara has agreed to buy the 35% stake in agriculture-focused financial service platform GroCapital Holdings Ltd held by Toronto-listed Fairfax Africa Holdings Corp.
Fairfax is the largest shareholder in Atlas Mara, holding a 42% stake in the firm, after investing in a USD200 million fundraise in September 2017.
Terms of the GroCapital deal have yet to be agreed, but will be undertaken on a proposed share exchange transaction.
Should Atlas Mara complete the GroCapital stake acquisition, it will own the firm alongside South African state-owned Public Investment Corp with a 35% stake and a 30% stake held by AFGRI Holdings Ltd. Fairfax has a 43% indirect interest in AFGRI.
The GroCapital deal will give Atlas Mara access to the South African banking market “enabling it to participate in financing of trade flows, foreign exchange, commodity finance and retail banking, and allow for operational integration into the core banking and technology environment of the company, including with regard to digital banking and cross-border payments”.
Atlas Mara has formed a special committee of its board of directors unaffiliated with Fairfax in order to negotiate the key terms of the GroCapital deal.
Atlas Mara also will support growth in its “flagship” Nigerian market through its Union Bank of Nigeria holding. UBN, in which it holds a 49% stake, is “central” to its overall strategy, and it will look to achieve consolidation of the bank and look to develop a “capital and liquidity plan oriented towards a sustainable dividend policy”.
The firm will also continue to invest in its digital banking strategy in which it plans to establish a sub-Saharan digital bank.
Atlas Mara believes the digital bank presents a “significant opportunity for growth” for the firm and that it was “increasing its focus on the initiative.”
Consequently, Atlas Mara Chief Executive Officer John Staley, appointed in April 2018, has been asked to focus his efforts on this opportunity in 2019.
Atlas Mara said Chair Bob Diamond will be replaced by current Non-Executive Director Michael Wilkerson as executive chair. Wilkerson is chief executive of Fairfax Africa.
Wilkerson thanked Diamond for “his leadership as chairman through the challenging times of the past two years”.
“I look forward to continuing to work together on the Board to build on our partnership to fulfil the vision of creating a leading, sub-Saharan African financial services platform to better serve our customers and communities,” Wilkerson added.
Diamond, a former chief executive of UK FTSE 100 bank Barclays PLC, assumed the chair on an interim basis two years ago.
He is stepping back in order to “increase his focus on his other executive roles while continuing to contribute actively to Atlas Mara’s growth and strategic direction”.
In addition, Atlas Mara has appointed former Commercial International Bank finance chief Muhammad Khan as its new permanent chief financial officer. Khan will replace acting CFO Kenroy Dowers from April.
Atlas Mara also hired former Citibank and ABN Amro Bank senior executive Jawaid Mirza as a non-executive director at the firm. Meanwhile, non-executive directors Funke Opeke and Hisham Ezz Al-Arab have resigned in order to “focus on their leadership responsibilities with other companies”.
Dubai-based Atlas Mara also intends to review its operating structure with an eye to “accelerate the shift of key functions and personnel closer to Atlas Mara’s banking operations in Africa”.
Over time, the firm expects to “eliminate various duplicative structures that were inherited from previous acquisitions” and create greater operational efficiency as well as lower costs.
Its Markets & Treasury offshore business, also located in Dubai, will also be re-positioned so it is “more strategically located for additional business opportunities”, especially in light of the GroCapital deal, to give Atlas Mara its first presence in South Africa.
Atlas Mara shares were trading up 4.2% at USD1.72 apiece in London early Wednesday.
