BancABC, the regional lender that Bob Diamond’s investment company Atlas Mara is seeking to take over, is lining up lines of credit worth $100-$300 million this year, its chief executive said.
The bank is already in talks with lenders such as the European Investment Bank and the African Development Bank, and expects a further injection of $100 million once the deal with Atlas Mara is concluded.
Atlas Mara, the London-listed shell company of former Barclays’ boss Diamond, is hoping to convince BancABC’s shareholders to part with their stakes in a share swap or in cash for up to $265 million.
“We have been growing phenomenally and capital and liquidity have become a problem.
“We just can’t fund and support the growth that we are seeing with the resources that we already have,” BancABC Chief Executive Douglas Munatsi said at the Reuters Africa Summit in Johannesburg.
Last year, BancABC posted a 10 percent rise in basic earnings per share of $0.09. However, its net impairments more than doubled to $37.4 million.
BancABC will use money raised from the Atlas Mara transaction to expand, aiming to eventually raise its market share in the countries it operates in – Botswana, Zimbabwe, Zambia, Mozambique and Tanzania – to the 10 percent that would make the bank a significant lender, Munatsi said.
He also plans to spend the money on upgrading technology and expanding the branch network.
In most of its operations, BancABC is trailing multi-national banks, large South African lenders and the biggest locally owned banks.
Munatsi said he expected Atlas Mara to eventually make an offer to minority shareholders which would be followed by the delisting of BancABC from the Botswana and Zimbabwe bourses.
Atlas Mara also plans to acquire 100 percent of major shareholder German-listed ADC African Development Corporation, so a delisting from the Frankfurt stock exchange is also envisaged, he said.
Atlas Mara has said it wants to become Africa’s leading financial services firm by providing capital, liquidity and funding to banks in sub-Saharan Africa. It is also in talks to acquire a controlling stake in state-owned Development Bank of Rwanda.
BancABC said on Tuesday it had reached agreement with the Africa Agriculture and Trade Investment Fund on a $25 million risk-sharing facility that will back lending to the agricultural sector in the five markets where BancABC operates.Advertisement
Munatsi did not rule out acquisitions for expansion but said potential targets were rare on the continent.
“A lot of people assume that local banks are for sale. They are not. Unfortunately, most of these guys probably don’t need the money,” he said.