Atlas Mara: Reshaping African Banking?
One Company’s Quest to Reshape African Banking
In late September 2013 a new financial services company was born with a bold vision-“to reshape African banking’. That company, the Atlas Mara Group, was founded by ex Barclays Plc Chief and Founder of Atlas Merchant Capital LLC Bob Diamond and celebrated entrepreneur and founder of the Mara Group, Ashish Thakkar. Atlas Mara conducted a successful IPO of $325 million with a London Stock Exchange listing. From its founding the bank has pursued an aggressive acquisition based strategy in which it has banking assets in variety of African countries including Botswana, Nigeria, Mozambique, Tanzania, Rwanda and Zambia. The posted strong early growth numbers including $625 million raised in equity capital and an asset base of $2.6 billion. by 2014. The company is sanguine about the growth prospects of the Sub-Saharan African region.
Thus, the bank seeks to acquire banking assets in high growth Sub-Saharan Africa markets with the aim of building a Pan African Banking group. n pursuing this strategy, the bank has made signature transactions. In 2014 Atlas Mara acquired the commercial arm of the Development Bank of Rwanda (BRD Commercial) followed later by the acquisition of the country’s second largest bank Banque Populaire du Rwanda. In a bid to expand its footprint in Southern Africa, Atlas Mara also made an acquisition of ABC Holdings Limited (BancABC) a regional play with operations in Botswana, Mozambique, Zambia, and Zimbabwe. As part of its west African expansion strategy the firm also took a 30% stake in Nigeria’s Union Bank. In July of 2016 the bank purchased Zambia’s Finance Bank and has plant to merge it the country’s BancABC subsidiary which would create the country’s largest bank by branch network. Atlas Mara has also been in talks with the US private equity giant Carlye Group to pursue a merger with Barclays Africa whose parent company Barclays Plc had recent sold 62 % of its Africa business in order to focus on its UK and US businesses.
The company is placing a bet on technology to drive its growth, efficiencies ,the provision of value added services, and expand the number of people accessing its financial services and products. Part of the bank’s strategy is to create new customers via its corporate social responsibility programs which focus on access to support entrepreneurship initiatives and financial literacy promotion. However the company has been riding a rough storm in the last couple of months. The company reported a first quarter loss of $ 6.7 million but management make $1.2 million profit by the first half of the year compared to $4.1 million a year earlier. Sluggish growth to weak commodity prices, weak currencies in its main markets, bad loans, and high operating costs have been said to have added to the bad profit performance.
To respond to these headwinds the company is embarking on an $8 million cost cutting initiative which will include a job cutting program that will shed approximately two thirds of banking group’s workforce. The bank’s shares have seen loss of initial value to the tune of about 71%. Yet Atlas Mara’s woes represent the general troubles that bank across Africa are facing as economies, slow down, and currencies plunge in the face of week commodity prices. However, the company’s leaders, including co-founder Ashish Thakkar remain bullish. The company is taking a long-term approach and betting on the continent’s long term prospects. The company is also making a bet on the role that technology is going play reshaping the structure of the banking industry in Africa. With the continent poised to see an expansion in amount of cell phone penetration, with about 700 million Africans’ projected to have smart phones in the next five years, companies such as Atlas Mara are positioning themselves to capitalize on these and other growth trends to drive a revolution in African banking.