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Atlas Mara Limited (ATMA)

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Wednesday 06 February, 2019

Atlas Mara Limited

Atlas Mara Undertakes Review of Strategic Options

RNS Number : 2177P
ATLAS Mara Limited
06 February 2019
 

 

6 February 2019

 

Atlas Mara Undertakes Review of Strategic Options

 

Atlas Mara Limited ("Atlas Mara" or the "Company" and, including its subsidiaries, the "Group"), the subSaharan Africa financial services group, today announces the following key initiatives and updates:

 

·      Atlas Mara's Board of Directors is undertaking a review of strategic options and assessing indications of interest for certain banking assets

 

·    Atlas Mara continues focus on investments in core markets where a path to market leadership is clearly achievable; will seek to partner, exit or reduce risk exposure elsewhere

 

·   Atlas Mara announces plan to accelerate new digital banking & agricultural finance initiatives, including a Memorandum of Understanding to consider the acquisition of Fairfax Africa's 35% stake in GroCapital, a South African financial services provider

 

·   Atlas Mara announces leadership transitions and enhancements to its management team and operational structure

 

The Board of Directors of Atlas Mara is undertaking a review of strategic options to determine the key strategic priorities and actions for 2019 and beyond to drive shareholder value.  The process includes a review of each banking operation to ensure that top five market leadership is practicably achievable in the near term, or to explore transactions that will reduce risk exposure where such leadership is unlikely on a stand-alone basis.  As part of this process, Atlas Mara has retained Citigroup Global Markets Limited ("Citi") to assist in the review and to evaluate various indicative proposals received by and options available to the Company.

 

The Board has identified the following key strategic priorities for 2019 and beyond that must be in place to realize substantial core operational growth and maximize value: 

 

1.   Focus on the core to maximize value by reducing exposure and/or activities in non-core markets; exploring potential strategic partnerships; selectively expanding into new scalable markets and/or increasing the depth and scope of financial services offered.

 

2.   Accelerate agricultural finance platform given the importance of the sector in Africa, with expertise that can be leveraged across Atlas Mara's markets through a potential new investment in a 35% stake in GroCapital, a financial services platform in the South African market.

 

3.   Execute on Nigerian strategy by achieving consolidation of Union Bank of Nigeria ("UBN"), and supporting opportunities for prudent growth along with a capital and liquidity plan oriented towards a sustainable dividend policy.

 

4.   Invest in high-impact technology and digital banking strategy, including establishing a sub-Saharan pan-African digital bank, creating transactional platforms to drive substantially lower cost of funds, enhancing core banking systems, and developing technology-enabled products to retain and grow Atlas Mara's customer base.

 

5.   Reposition Markets & Treasury business line and expand client base and offerings, moving closer to relevant business opportunities, and accelerating revenue growth by offering a full suite of products and services to a larger and more diverse group of clients.

 

Further detail of these strategic initiatives will be communicated as part of an Investor Day intended to be held following the release of Atlas Mara's 2018 financial results.

 

Fairfax Africa Holdings Corporation ("Fairfax Africa"), as the largest shareholder of Atlas Mara, and Atlas Merchant Capital ("AMC"), the investment platform of the founder of Atlas Mara, remain committed to these strategic priorities to accelerate the transformation of the Group and create shareholder value. 

 

As a long-term Africa investor with a permanent capital base and a footprint complementary to that of Atlas Mara, Fairfax Africa continues to represent a strong and supportive strategic partner for the Company to enable its next phase of growth.  The companies are exploring geographic and operational synergies, given Fairfax Africa's holdings and expertise across the sector including in agricultural finance, infrastructure finance, and insurance, among other areas.

 

 

Union Bank of Nigeria

 

Nigeria remains a flagship market for Atlas Mara and is central to the Company's overall strategy.  The Company is focused on execution of its previously stated objectives, including achieving consolidation of UBN.  Atlas Mara remains committed to supporting UBN's strategies for growth within the Nigeria banking industry. Notably, Atlas Mara will support a growth strategy consistent with prudent management of capital and liquidity and a sustainable dividend policy. 

 

 

Digital Banking

 

As part of its strategic imperative to be a positive disruptive force in the banking industry, Atlas Mara will focus on developing a digital banking platform that can be implemented across its markets to strengthen its retail banking franchise, and which is expected to lead to a broader base of deposits and lower cost of funds.  Sub-Saharan Africa remains one of the greatest global opportunities for enhancing financial intermediation using technology, and Atlas Mara intends to use the Digital Bank to accelerate its core business growth and profitability across the Group.

 

Atlas Mara believes that the Digital Bank presents a significant opportunity for growth, and the Company is increasing its focus on the initiative.  As a result, the Board has asked John Staley, CEO, who has significant experience and expertise in this area, to focus his efforts in 2019 on developing this opportunity for the Company.

 

 

Leadership Changes

 

Atlas Mara announces that Bob Diamond, a founder of the Company, has decided to transition from his role of Chairman and return to his role as a non-executive director of the Board, to enable him to increase his focus on his other executive roles while continuing to contribute actively to Atlas Mara's growth and strategic direction.  As previously announced, Mr. Diamond assumed the role of Chairman on an interim basis with the expectation that a new Chairman would be appointed in due course.  He has served as Chairman for two years, guiding Atlas Mara through a substantial transformation, including its strategic financing with Fairfax Africa and the increase in its ownership of UBN from 31% to 49%.

 

Concurrently, the Board has appointed Michael Wilkerson, a non-executive director of Atlas Mara, to assume the role of Executive Chairman.  Mr. Wilkerson currently serves as Chief Executive Officer of Fairfax Africa, a TSX-listed company focused on investments in Africa, and the largest shareholder in Atlas Mara. 

 

In other changes, Funke Opeke, Chair of the Nominations Committee and Hisham Ezz Al-Arab have resigned as directors of Atlas Mara to focus on their leadership responsibilities with other companies, as CEO and as Chairman and Managing Director, respectively.  The Board has appointed Mr. Diamond to assume the role of Chair of the Nominations Committee in place of Ms. Opeke.

 

The Board of Directors is pleased to announce the appointment of Mr. Jawaid Mirza as an independent non-executive member of the Board, effective April 1, 2019.  Mr. Mirza has over 30 years of experience in banking with global financial institutions, including senior executive positions with Citibank and ABN AMRO Bank.  He served as ABN AMRO's CFO European Region, Managing Director and COO for Global Private Banking, Asset Management and New Growth Markets, and Managing Director and CFO for Asia, Middle East and Australia.  Mr. Mirza also served as Group COO and later CEO and Managing Director for Consumer & Commercial at Commercial International Bank of Egypt. 

 

Mr. Mirza is currently an independent non-executive board member of Eurobank Ergasias (Athens), where he chairs the Audit Committee and is a member of the Risk Committee, and of Commercial International Bank ("CIB") of Egypt, where he chairs the Audit Committee and is a member of the Risk and Board Technology & Operations committees.  He is also a non-executive board member of the South African Bank of Athens.

 

Mr. Diamond said, "I am excited to return to my original role on the Board and to continue to partner with Michael to accelerate the execution of our strategy.  My belief in our ambition - to create a premier sub-Saharan African financial institution to better serve continental and global customers - remains as strong as the day we founded the Company."

 

Mr. Diamond also said of the transitions, "On behalf of the Board, I want to thank Funke and Hisham for their valuable contributions to the growth and strategic direction of Atlas Mara.  They provided extraordinary service and leadership, and we wish them all the best with their companies.  I am also excited to work with Jawaid, who I know will bring incredible value to the Board."

 

Mr. Wilkerson said, "On behalf of the Board of Directors and the Company, I want to express our gratitude to Bob 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 fulfill the vision of creating a leading, sub-Saharan African financial services platform to better serve our customers and communities.  Mr. Wilkerson continued, "We thank Funke and Hisham for their service and look forward to welcoming Jawaid to the Atlas Mara Board of Directors.  We have high regard for Jawaid's expertise and know that he will add substantial value to the Company going forward."

 

Atlas Mara further announces that Muhammad "Omar" Khan has been appointed Chief Financial Officer of Atlas Mara effective April 2019.  Kenroy Dowers, who served as Acting Chief Financial Officer, will continue in his role as Group Managing Director for Strategy and Investments.  Mr. Wilkerson said, "We greatly appreciate Kenroy's strong leadership and significant contributions as Acting CFO, and look forward to continuing to work with him."

 

Mr. Khan was previously Chief Operating Officer and Chief Financial Officer of Commercial International Bank ("CIB").  Mr. Khan has over 24 years of banking experience in the Middle East, Asia, Europe and Canada with Citibank, ABN AMRO, Royal Bank of Scotland and CIB, among others.  During this time Mr. Khan has developed expertise in a multitude of areas of banking, including Finance, Asset & Liability Management, Service & Quality, Retail, Operations, Human Resources, Project Management and Administration.

 

 

Proposed Acquisition of 35% stake in GroCapital

 

Consistent with the strategic alignment outlined above, Atlas Mara and Fairfax Africa have entered into a non-binding Memorandum of Understanding whereby Atlas Mara would explore the acquisition, in a proposed share exchange transaction on terms to be agreed, Fairfax Africa's 35% stake in GroCapital Holdings Limited ("GroCapital"), a South African financial services provider with a core focus on the agricultural and food processing sectors.  This transaction will be subject to finalizing definitive agreements, as well as the approval of the South African Reserve Bank, the Minister of Finance, and the Competition Commission, and other regulatory approvals and customary conditions precedent.

 

In addition to Fairfax Africa, GroCapital's shareholders include the Public Investment Corporation of South Africa (35%) and AFGRI Holdings Limited ("AHL") (30%).  Fairfax Africa has a 43% indirect beneficial interest in AHL.

 

GroCapital offers through its subsidiaries comprehensive traditional business banking such as lending, transactional banking and treasury functions, as well as alliance, business and international banking.  Its subsidiaries are known for a focus on the development of market-leading, niche alliance transactional banking offerings in partnership with businesses. GroCapital's go-forward strategy is to focus on companies in agriculture and food production, offering debt origination, forex and commodity trading, specialised finance and broking services, and an array of financial and insurance products and services directly to the farmer and agricultural intermediaries.  As part of AHL, GroCapital has an established track record in financial services, offering bespoke financial products and services to the agribusiness and food sectors.  AHL maintains c. $1 billion in farmer and corporate loan portfolios, with a proven history of negligible bad debts through multiple agricultural cycles.

 

When concluded, this transaction would position Atlas Mara to access 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.  The Board sees considerable potential for the Company to capitalize on the large market opportunity in agricultural finance ("agrifinance") in sub-Saharan Africa and the unique positioning Atlas Mara could achieve with this strategic transaction to enhance its capabilities in this industry vertical. 

 

The World Bank estimated in a 2016 report on agribusiness in sub-Saharan Africa that the sector faces an annual financing gap of at least $11 billion, and agribusinesses routinely cite the lack of access to financing as one of the key impediments to their growth.  Atlas Mara's current footprint includes markets in which agriculture is a leading contributor to economic output but remains underbanked.  For example, in Nigeria, the Company's largest market, agriculture is one of the largest economic contributors at more than 20% of GDP and more than 30% of employment per the World Bank's 2017 data, but represents a far smaller proportion of credit and financial services transactions.  Atlas Mara's footprint is well matched to a focused agrifinance strategy, and the Board foresees the potential of such a strategic transaction to enhance the Company's agrifinance-specific capabilities and expand its reach into new, attractive agrifinance markets.

 

The Board of Directors of Atlas Mara will form a special committee of independent directors who are unaffiliated with Fairfax Africa or GroCapital to assess the strategic merits of the potential transaction, and to oversee negotiation of the key terms of a proposed agreement.
 

Operating Structure

 

The Company is also reviewing its operational structures.  Dubai will for the time being remain the corporate headquarters of Atlas Mara, while the Company accelerates the shift of key functions and personnel closer to Atlas Mara's banking operations in Africa.  Over time, the Group expects to eliminate various duplicative structures that were inherited from previous acquisitions, which is expected to result in greater operational efficiencies and lower costs.

 

As part of the review the Company has also determined to reposition the Markets & Treasury offshore business segment, to be more strategically located for additional business opportunities, and in light of the potential agreement to acquire a substantial position in GroCapital, which will give Atlas Mara its first presence in South Africa.  The offshore segment will transition from its base in Dubai, with further plans to be announced in due course.

 

 

Contact Details

Investors

Kojo Dufu, +1 212 883 4330

 

Media

Teneo, +44 20 7420 3142

Anthony Silverman

 

 

About Atlas Mara

Atlas Mara Limited (LON: ATMA) is a financial services institution founded by Bob Diamond and listed on the London Stock Exchange.  Its vision is to create sub-Saharan Africa's premier financial services institution through organic and inorganic growth by combining the best of global institutional knowledge with extensive local insights.  With a presence in seven sub-Saharan countries, Atlas Mara aims to be a positive disruptive force in the markets in which we operate by leveraging technology to provide innovative and differentiated product offerings, deliver excellent customer service and accelerate financial inclusion. For more information, visit www.atlasmara.com
 

Forward Looking Statement and Disclaimers

 

This announcement does not constitute or form part of any offer or invitation to purchase, otherwise acquire, issue, subscribe for, sell or otherwise dispose of any securities, nor any solicitation of any offer to purchase, otherwise acquire, issue, subscribe for, sell, or otherwise dispose of any securities.

 

The release, publication or distribution of this announcement in certain jurisdictions may be restricted by law and therefore persons in such jurisdictions into which this announcement is released, published or distributed should inform themselves about and observe such restrictions.

Certain statements in this announcement are forward-looking statements which are based on Atlas Mara's expectations, intentions and projections regarding its future performance, anticipated events or trends and other matters that are not historical facts, including expectations regarding the future operating and financial performance of the Company. These statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements.

 

Given these risks and uncertainties, prospective investors are cautioned not to place undue reliance on forward- looking statements and the actual events or consequences may differ materially from those contained in or expressed by such forward-looking statements. Forward-looking statements speak only as of the date of such statements and, except as required by applicable law or regulation, Atlas Mara expressly disclaims any obligation or undertaking to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

 

 


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