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Lagos - Atlas Mara, the African investment vehicle of former Barclays boss Bob Diamond, has lifted its stake in Union Bank of Nigeria to almost 30% with a $270m investment that is its biggest deal to date.
It marks the third significant acquisition by Atlas Mara, set up last year by Diamond and Africa-based entrepreneur Ashish Thakkar with a goal to become Africa's leading bank. It raised $300m last month to add to its acquisition war chest.
Atlas Mara said on Friday it was buying a 20.9% stake in UBN from Asset Management Corporation of Nigeria (Amcon), taking its holding to 29.9%. Reuters reported on Thursday Atlas Mara was in talks to buy the stake.
UBN has 340 branches across Nigeria and had about $6.3bn of assets, $3.1bn in deposits and $1.3bn in equity at the end of June. Atlas Mara said it purchased the stake at about book value.
UBN was established as Colonial Bank in 1917, and from 1925 until the 1970s was owned by Barclays, the British bank that Diamond led before being ousted under a cloud two years ago. UBN's market capitalisation is about $850m.
"This is a very significant acquisition ... we will have a significant stake in a key Nigerian bank and we will also have established strategic market positions in three of Africa's leading economic communities: the Southern Africa Development Community, the East Africa Community and Economic Community of West African States," Diamond said in a statement.
Previous deals have given Atlas Mara a platform in several countries including Botswana, Mozambique and Tanzania.
It said in a prospectus published last month it was considering buying a minority stake in a bank in Nigeria, which is sub-Saharan Africa's largest economy and one of its most attractive and fast-growing markets for banking.
The prospectus said it could look to reach agreement with other investors "to provide a path to taking control" of its target bank.
Plans for Africa
UBN is majority owned by Union Global Partners (UGPL), a consortium of investors including hedge fund Corsair Capital, African Capital Alliance and the Netherlands Development Finance, which stepped in to support it after a 2009 state bailout.
Diamond is one of the world's best-known bankers after spearheading the growth of Barclays' investment bank before being forced from his job as CEO in 2012 by UK regulators after the bank was fined for attempted rigging of Libor interest rates.
His plans in Africa could put him in direct competition with Barclays, which has had a presence there since the 1920s and is one of the biggest international banks on the continent.
UBN was known as Barclays Bank CDO (Dominion, Colonial and Overseas) when it was bought by Barclays, and became Barclays Bank of Nigeria in 1969 after Nigeria's independence, according to the bank's website.
UBN is trying to aggressively grow its loan book and claw back market share it lost during the financial crisis when it was bailed out along with eight other banks in 2009 by the Nigerian government, which was followed by a period of consolidation and investment in safe government securities.
It is tapping into strong demand from the country’s oil and gas sectors and manufacturers and plans to lend 40% more this year having already grown its balance sheet by 55% in 2013. The bank made a pretax profit of $26m last year, up a quarter from 2012.
UBN's Lagos-listed shares rose 4.2% by 13:00, while Atlas Mara shares edged up 0.3%. Shares in both companies are not widely traded.
