Atlas Mara May Support Union Bank’s Growth Plan via Acquisitions

By Modupe Gbadeyanka

There are strong indications that one of the key shareholders in Lagos-based Union Bank of Nigeria Plc, Atlas Mara, will not sell off its stake in the company.

Atlas Mara has presence in seven African markets, but it plans to exit four of them and remain only in Nigeria, Zimbabwe and Botswana.

The company wants to leave the four countries in return for 6.3 percent of Nairobi-based Equity Group Holdings Plc.

Chairman of Atlas Mara, Mr Michael Wilkerson, confirmed that instead of quitting Union Bank, the company will focus on further increasing its 49.7 percent stake in the financial institution so as to assist the business grow, possibly through acquisitions.

In March 2019, Access Bank Plc, a tier-one lender, completed its merger with Diamond Bank Plc, a tie-two bank.

Analysts have opined that more of mergers and acquisitions will occur in the Nigerian business space as operating environment continues to bite harder.

In a report this week, Bloomberg said the CEO of Atlas Merchant Capital LLC, Mr Bob Diamond’s change in strategy to build Atlas Mara into a pan-African lender is helping a rival Kenyan banker fulfil a long-held objective of expanding on the continent.

Atlas Mara misjudged the calibre of competition in Africa and ultimately paid too much for acquisitions, just as a commodity-price bust slowed growth across the continent.

“The vision on Africa is as sound as it’s ever been,” Mr Diamond said in an interview. “Everything about this is a long-term investment. Banks that were not at scale or not performing well now have a much better chance.”

According to Bloomberg, Mr Wilkerson called the deal an evolution of Mr Diamond’s strategy, focusing on markets where Atlas Mara can find a “path to leadership” and exiting or partnering where the firm is “sub-scale or not making enough money.” Speaking by phone, he also praised Equity Group’s operating skills in being able to make the most out of acquisitions.

Mr Diamond was still optimistic in September 2017 that Atlas Mara could increase its footprint to 10 or more African countries after selling a 42 percent stake to a division of Canadian insurer Fairfax Financial Holdings Ltd, a deal that gave Atlas Mara the firepower to up its stake in Union Bank.

Mr Diamond, who is focusing on investments in European financial services, handed over Atlas Mara’s reins to Mr Wilkerson in February, remaining a top five shareholder and non-executive director of Atlas Mara.