African Banking Corporation (ABC) will in due course pull out from Botswana and Zimbabwean stock exchanges, BG Business has learnt.
This follows the successful completion of a marathon takeover of the regional banking group by Atlas Mara, an investment boutique based in London. “To be honest our continued listing will depend on authorities. Still, by continuing trading at BSE following the completion of the deal, we will be in violation of trading rules which state that our exposure to the market should be at least 30 percent,” Douglas Munatsi, the group chief executive told this publication.
He was speaking after making an update on the Atlas Mara acquisition Tuesday night in Gaborone. According to Munatsi, the new investors have not officially talked about going private, but he stopped short of saying it is a foregone conclusion. Atlas Mara, a company co-founded by former Barclays managing director Bob Diamond and Ashish Thakkar now owns a controlling stake of 95, 84 percent after regulators gave the company the nod to take over the Botswana Stock Exchange listed lender. The decision to delist from BSE will end a 14 year stay at the local bourse, where the bank was valued at P1, 4 billion. All things equal, the group is expected to start offering the remaining minority shareholders an option to buy them out. This will effectively pave way for Atlas Mara to be the sole owners. ABC has operations in Botswana, Zimbabwe, Mozambique, Tanzania and Zambia.
According to Munatsi and chief financial officer Beki Moyo, the remaining 4 percent in issued shares is currently spread between BSE and Zimbabwe Stock Exchange (ZSE). “The remaining shareholders (minorities) will have no option but to take whatever offer Atlas Mara makes,” said a top official from the bank this week. ABC was listed at ZSE in 2000, just before Zimbabwe was hit by political and economic crises. BG Business understands that Atlas Mara will offer minority shareholders the same price that they made to African Development Corporation (ADC) and ABC shareholders in April. ADC is a former majority shareholder at ABC. Atlas Mara paid 82 cents a share for BancABC and offered 1.25 of its own shares for each one of ADC’s. ABC has used its primary listing at BSE to raise cash to fund its expansion. With delisting looming, how will the lender approach the capital market here to carry out any debt raising exercise? “The owners (Atlas Mara), who are listed at the London Stock Exchange will be in a position to raise money there,” said Moyo, who together with Munatsi jetted into the country from South Africa late Tuesday to update stakeholders on the historic acquisition. The deal costs as much as $265 million, Bloomberg has reported.
On other matters, Atlas Mara is expected to appoint at least two directors into the board of ABC. Jitto Kurian, the managing director of subsidiary BancABC said the acquisition would afford them an opportunity to make more capital for expansion. “Retail operations need more funding,” he said, refusing to state if they are planning to request for funding to power the local unit. Botswana operations remain the group top performer, despite having been a newcomer in the retail banking scene that has been dominated by British and South Africa banks. “The Atlas Mara deal is certainly a game changer for BancABC as it will give the group access to the capital it has long desired,” said a company report from Central African Stock Exchanges (CASH) handbook. Atlas Mara executives are already looking forward to expand in the continental level, especially in the ‘vibrant’ East African Community (EAC). A leading analyst, Garry Juma said any delisting from BSE would also be a drawback. The local bourse is struggling to attract new company listing.
It recently listed a platinum tracking ETF, but it finished last year without any listing. However, Juma, who is head of research at Motswedi Securities, said though it remains an important player, ABC stock is not one of the most liquid. Fresh market data shows that in the 12 months to date, ABC has struggled to beat the 720 thebe per share mark. On other matters, critics have questioned Diamond’s credibility to run any bank. He left Barclays plum post in 2012 after an inter-bank rate rigging scandal that attracted a fine from regulators. “I don’t think Bob is discredited as some say,” said Juma, adding that by passing strict LSE listing rules to put his company into the public, he has proved a point. In fact, by going continental, Diamond’s company is taking the heat to Barclays, his former employers who also ply their trade in Africa. At the close of markets, ABC was trading at 720 thebe.