CORRECTED: Atlas Mara raises stake in Nigeria’s Union Bank to 44.5%

Atlas Mara

Sub-Saharan African-focused financial services major, Atlas Mara Limited has increased its stake in Union Bank of Nigeria through an equity acquisition.

The stake was increased through the acquisition of an indirect 13.4% shareholding in UBN from the Clermont Group for a total consideration of USD55 million.

The transaction is subject to regulatory approval by the Nigerian Stock Exchange. The transaction will increase Atlas Mara’s combined direct and indirect shareholding in UBN to 44.5%. This acquisition accelerates Atlas Mara’s long-term strategy to build its banking business in Nigeria.

Atlas Mara has also raised USD200 million via a strategic financing agreement with Fairfax Africa which Atlas Mara said it wants to use growth initiatives.

Atlas Mara said it raised the USD200 million of new capital from Fairfax Africa and existing shareholders of the company.

The first tranche of the financing was done through USD100 million equity offering of new ordinary shares at a price of USD2.25 per share. Qualifying existing Atlas Mara shareholders will be invited to participate in the equity offering by way of an open offer alongside Fairfax Africa, which will serve as the committed underwriter of the equity offering.

With its contribution, Fairfax Africa will have the right to secure a minimum of 30.0% of the Open Offer. Any shares not taken up by qualifying existing Shareholders will be subscribed for by Fairfax Africa.

Another USD100 million via a mandatory convertible bond to be issued to Fairfax Africa, which will convert into New Ordinary Shares at the Issue Price upon the closing of the Open Offer.

The strategic financing is subject to Shareholder approval at an extraordinary general meeting of the Company. It is expected that a new management incentive plan will be put in place following the closing of the Open Offer.

The proceeds of the strategic financing are primarily intended to support the Company’s commitment to UBN and Nigeria via the: (1) fund the Clermont Stake Acquisition, (2) fund the Company’s subscription of its pro rata entitlements under the forthcoming rights issue announced by UBN (the “UBN Rights Issue”), and (3) further expand the Group’s strategic business lines of Markets and Treasury and FinTech. The Company believes the current valuations for the additional shares to be acquired in UBN make this expansion attractive and will contribute positively to shareholder value.

A strategic partnership with Fairfax Africa creates a strong relationship between two like-minded, long-term investors in Africa. Each is focused on capitalising on the long-term growth potential of Africa and provides permanent capital to support growth. Furthermore, the principals of each company have long-term track records working in financial services in emerging markets and are anchored by a long-term vision for sub-Saharan Africa. Upon conversion of the Mandatory Convertible Bond and participation in the equity offering, Fairfax Africa is expected to have a total shareholding of at least 35% in Atlas Mara. Fairfax Africa will nominate four (4) directors to the board of directors of Atlas Mara (the “Board”) out of a total of nine (9) directors. Bob Diamond will continue in his capacity as Chairman of the Board.

The transactions will be submitted for the approval of Shareholders at an extraordinary general meeting (“EGM”) to be convened for that purpose. The terms and conditions relating to the equity offering will be set out in a prospectus (the “Prospectus”) and other related documentation. The Company will issue further announcements in due course in relation to the EGM, publication of the Prospectus and the commencement of the offering period for the Open Offer.

Bob Diamond, Chairman of Atlas Mara, said “Our Board is thrilled to announce this important series of transactions. We have a terrific new partner in Fairfax Africa – a strategic investor and partner who brings permanent capital and a shared vision of the banking opportunities in sub-Saharan Africa.

With Fairfax, we are now better positioned to achieve our full potential and to benefit from the long-term trends we see in Nigeria and sub-Saharan Africa. Our team will continue to drive “execution, execution, execution,” to deliver profitability, growth and shareholder value,” he said.

Atlas Mara was founded by Barclays Bank former Chairman, Bob Diamond alongside Africa-based entrepreneur Ashish Thakkar, after he had left the bank in the wake of the LIBOR rigging scandal.

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