Category Archives: Zambia

Atlas Mara Prospectus Peek

Atlas Mara is selling 44.44 million new shares at $2.25 each to raise $100 million. Atlas Mara is acquiring 13.4% equity in Union Bank Nigeria (UBN), from Clermont Group for $55 million, increasing its stake to 44.5%.

This offer aims to raise $30 million from Fairfax Africa (a Canadian investment holding company that is listed on the Toronto Stock Exchange) by selling them 13.33 million shares at $2.25 each. Fairfax will also sign up for $100 million of mandatory convertible bonds due in 2018. It is intended that the funds raised from the issue of the mandatory convertible bonds will be used to fully fund the UBN purchase and the remainder be used to fund the bank (expansion of the market, treasury and fintech business lines and product offerings) and participate in the UBN rights issue.

Atlas Mara is a company incorporated in the British Virgin Islands (largely a tax-free territory – no income, withholding or capital gains taxes) and is the holding company for a group that provides bank and financial services across sub-Saharan Africa which they intend to disrupt. Atlas Mara was formed in November 2013 by Atlas Merchant Capital LLC and the Mara Group, led by Robert E. Diamond Jr. and Ashish J. Thakkar, respectively. In 2016, Atlas Mara had $2.7 billion assets and $ 9 million profit in 2016.

Africa footprint: Besides UBN, they also own 100% of Finance Bank of Zambia (the 5th largest bank in Zambia, serving 2 million people), and 62.1% of Banque Populaire du Rwanda (swelled by a merger with BRD Commercial Bank). Also ABC Holdings – Botswana (owned 62.13% by the Company and 37.87% by Atlas Mara Financial) owns 100% of African Banking Corporation Zambia, 100% of ABC Holdings (Zimbabwe), 68% of Tanzania Development Finance Corporation, 97% of African Banking Corporation of Tanzania, 100% of African Banking Corporation of Mozambique SA, and 100% of African Banking Corporation of Botswana

Atlas shareholders are Guggenheim Partners Investment Management (11.22%) Wellington Management Company, LLP (9.91%) Owl Creek Asset Management, LP (7.99%), Trafigura Holding (6.23%), UBS Asset Management: O’Connor (8.10%) Janus Capital Management LLC (3.92%). Of the founders, Atlas – AFS Partners LLC has 0.5% and Mara Partners FS has 0.13% while Mr. Diamond beneficially owns 1,000,000 Founder Preferred Shares and Mr. Thakkar beneficially owns 250,000 Founder Preferred Shares.

UBN is a mid-tier bank with about 3% market share of assets and loans and deposits in Nigeria. It was established in 1917 and rescued from insolvency in 2009 along with other banks. It now has 3 million customers, 900 ATM’s and 414,000 mobile banking users and, in 2017, UBN  signed agreements with Visa and MasterCard

UBN Plans: While Atlas Mara is not going for a majority stake in UBN (though they may choose to do this), they will;
– Push UBN to be a leading Tier II bank in Nigeria
– This will be done using fintech and treasury initiatives
– They will use UBN to secure more lending
– After 2019, they will push UBN to be a Tier I bank by acquiring another Nigerian bank

Risks facing UBN: Nigeria has recently experienced significant depreciation of the Naira, inflation and economic recession. Also, UBN’s loan book is exposed to the oil and gas sector which comprises 47% of its lending. Also, there is currently a 12.9% free float of UBN’s shares, which is below the mandatory 20% free float requirement prescribed by the Nigerian Stock Exchange Listing Rules.

Fees: $1.9 million will be paid to Atlas Merchant Capital LLC, the investment fund co-founded by Bob Diamond, upon completion of the transaction.

The deal deadline is 29 August.

Extracts from the Atlas Mara prospectus.

EDIT August 30 Atlas Mara is pleased to announce the closing of the offer period for the recently launched Placing and the Open Offer on 29 August 2017. The Placing and Open Offer, together with the recently announced strategic investment from Fairfax Africa (comprising a Mandatory Convertible Bond and a Firm Placing) constitutes “the Strategic Financing”. The Strategic Financing will support Atlas Mara’s growth initiatives in the acquisition of additional equity interests in Union Bank of Nigeria Plc (“UBN”) and scaling up the Markets and Treasury and Fintech business lines. ..Bob Diamond, Chairman of the Board of Atlas Mara, said: “We are thrilled to have Fairfax Africa as our long-term partner. This transaction puts Atlas Mara in a very strong position to deliver on our strategic goals. We remain focused on execution and delivering on cost discipline and profitability.”

Guide to Lusaka

A guest post by @digitalafrican

Getting There: The cost to travel to Zambia is extremely high, and each ticket is around $700-800. Kenya Airways pretty much has a monopoly on travel to Zambia, and the route takes you through Lilongwe, Malawi. Once there, you can get a visa right at the airport with no hassle e.g. $50 for American visitors.

Everything at the airport is pretty straightforward. There aren’t any unexpected taxes once you arrive although when you leave there can be a $25 tax that is levied. (though I didn’t experience this).

Getting Around: You can use matatu’s, private cars and of course walking. Lusaka is pretty small and easy to get around. The cost for a typical taxi is around 100,000 Zambian Kwacha (equivalent to around $20).

Zambia is an incredibly peaceful country. Many people enjoy long walks and jogs around the city. There are some very well built pedestrian walkways and Zambians usually follow the rules of the road so it’s is relatively safe.

Communications: Coming from Kenya, Safaricom doesn’t seem to work here. However the two most popular services are Airtel and MTN, and it is pretty easy to get a SIM card and the rates are affordable. There are very few Wi-Fi hotspots, while decent cybercafés are rare.

Language: English is the primary language, and most locals speak it fluently.

Business & Infrastructure: – It may be hard to get accustomed to the currency, as you are dealing with thousands of Kwacha. One (US) dollar is around 5,000 Kwacha, so you can imagine trying to buy a soda.

Hotels : Cost from $100+. Excluding, this you might spend about $40.00 per day out & about.

Electricity: There is plenty of electricity, and no power cuts in Zambia due to plenty of water flowing through the Kariba Dam and Victoria Falls. The streets are also well lit.

Opportunities: Zambia is also known for its natural resources such as copper and hydroelectricity so there are huge opportunities there as well. Also, I would say anything within tech and the digital space would be a great investment in the country.

Food & Bars: – One thing to get accustomed to, is the drinking culture, which is a prevalent part of the social culture, and may take some adjusting to depending on where you are from.

– Arcardes and Manda Hill are two popular spots in Zambia. The food is incredible but the service is incredibly slow. Make sure you pack a lot of patience when you come to Zambia.

– Some Local foods to try are Shima (a version of Ugali), fish and green vegetables, while the local Beer is Mosi.

– Football and politics are popular topics of conversation. I would say the biggest legend in Zambia would have to be Kenneth Kaunda (KK), the first president of Zambia. After serving as president for 27 years, KK has left an impression on the country.

Shopping & Sight-Seeing: – In Zambia, the two most popular sightseeing destinations are the Kariba Dam, one of the largest dams in the world and Victoria Falls, which is a beautiful spectacle of natural life. A trip to either is one that you can’t miss. Zambia has incredible nature and wildlife areas that are unbelievable; it is not rare to see wildlife while driving through the main highways. We were able to spot many elephants and deer during my time there.

– Wooden crafts and Fabric are very popular gift items. Compared to all the countries I have traveled to in Africa, wooden crafts are Zambia’s strong point.

Biggest surprise about the country: I would say that the country seems empty and spacious. There is not a large population and they have preserved a lot of their natural resources