Following reports that Atlas Merchant Capital has teamed up with major U.S. buyout firm Carlyle Group to put together a bid for Barclays PLC’s stake in Barclays Africa Group, Atlas Mara, the African investment vehicle of former Barclays boss Bob Diamond, said on Tuesday it had held discussions with investors with a view to making a bid for Barclays African business. Atlas said its board supported exploration of a possible acquisition, “given the expected positive impact on accelerating the company’s strategy to build sub-Saharan Africa’s premier financial institution,” it said in a statement, in response to media speculation about its interest in the business.
Atlas said that there was no certainty that a transaction would be completed but if its discussions with fellow investors resulted in more substantive negotiations with Barclays, Diamond and co-founder Ashish J. Thakkar will recuse themselves from such discussions. Earlier this year, Barclays said it would sell down its 62 percent stake in Barclays Africa Group to focus on other divisions.
Atlas Mara, Diamond’s African banking group which he co-owns with entrepreneur Ashish J. Thakkar, won’t be making a solo bid for Barclays Africa Group because its market capitalisation at London’s AIM index, at roughly USD 300m, prohibits it from bidding for such a large entity, a person familiar with the situation said. Barclays PLC owns 62.3% in Barclays Africa Group and is seeking to sell down most of that for regulatory reasons, with U.K. banking regulations making it increasingly burdensome for large banks to own assets in multiple jurisdictions and Barclays’ sale of the African unit will cut the rising costs of complying with this regulation, the bank said. Analysts estimate the bank will need to sell a stake worth roughly USD 3bn, making it a massive banking asset for the African market.
It will be interesting to see how the Barclays PLC sale plays out, but this would certainly be the first notable potential bidder to have come to the fore, if the rumours are true. A new parent, and potentially more aggressive one, in our view would be a positive for many of Barclays’ African subsidiaries, where the long established institutions, while solid, have in many markets seen more nimble peers able to generate higher returns as they displayed less conservatism without the somewhat “overbearing” risk aversion of a PLC type parent. A more locally driven strategy could thus herald a new lease of life for growth for these institutions as they navigate the nuances of the changing African financial services landscape.