Equity – Atlas Mara bank deal

Atlas Mara and Equity Bank Group announced an agreement for the exchange banking assets.

The deal will see Equity acquire Atlas Mara’s 62% shareholding in Banque Populaire du Rwanda  and Atlas Mara’s interests of 100% of BancABC Zambia, 100% of BancABC Tanzania and 100% of BancABC Mozambique in exchange for Atlas Mara receiving 252 million newly-created Equity shares worth $105 million (Kshs 10.7 billion). Through the deal, Equity expands its Africa footprint into two new countries of Mozambique and Zambia

This also came the day that Atlas Mara announced their financial results for December 2018 which ended with $2.8 billion assets and profit after tax of $34 million, which were slight declines partly attributed to reduced interest income, the enactment of IFRS9 and the economic situation in Zimbabwe.

The four banks combined constitute less than 2% of the revenue of Atlas Mara. They would all require capital and liquidity to support and will now be consolidated off the Atlas Mara balance sheet in the deal to be concluded by the end of the year. Atlas Mara will now continue to focus on core investments where they can be market leaders. In 2019, they plan on stabilizing the bank in Zimbabwe and increasing their 49.7% shareholding at Union Bank of Nigeria.

Also In the results announcement, Michael Wilkerson, the Executive Chairman of Atlas Mara wrote about being frustrated, liked other shareholders, that the company’s share prices did not represent its true value and that the new stake in Equity, digital banking leader, would help improve that. They also did a BankABC Bostwana IPO in December 2018 selling 25% of the bank to investors on the Botswana stock exchange.

EDIT: The Business Daily reported on October 9, 2019, that Equity got a $130 million (~Kshs 13 billion) discount on the purchase of the four banks from Atlas Mara whose prices were marked down after a due diligence exercise.

EDIT:  March 26 2020: Atlas Mara confirmed it was still in discussion with the  Equity Group but did not expect to conclude these in the early part of 2020. Atlas aims to publish their accounts by the end of April but has postponed their shareholders AGM set for May 2020, due to the Coronavirus scheduling impracticalities.

EDIT: June 23 2020:  Atlas Mara and Equity Group mutually agree to discontinue transaction discussions as Equity has changed strategy given the effects of the COVID-19 pandemic globally and on the economies in which EGH entities operate.

The statement by Atlas Mara reads that they remain committed to implementing the previously-announced strategic decisions which include streamlining the holding company structure and related costs, and exiting or partnering in certain countries.

EDIT: September 29 2020: Atlas Mara announced that its subsidiary, ABC Holdings has entered into definitive agreements with Access Bank for the sale of its holdings in African Banking Corporation Mozambique

The transaction will include upfront cash consideration payable at closing equal to approximately 0.8 times book value as of 30 June 2020, plus additional cash consideration payable 24 months after closing of the transaction.