Bob Diamond is eyeing Barclays’ African business as a way of fulfilling his target of doubling the size of Atlas Mara, his financial services business, on the continent.
An acquisition of all or most of Barclays’ business, worth £3.5 billion, could raise eyebrows, as the colourful American ran the bank until he was ousted in 2012 over Libor-rigging.
Jes Staley, the bank’s new chief executive, has said that he wants to change the strategy and values of the past. Last night, after the London market closed, Fitch downgraded its credit rating on Barclays Africa.
Mr Diamond may prove to be one of the keenest and best-placed buyers of Barclays’ assets. Atlas Mara’s management knows the African business, which is in 12 countries and is listed in Johannesburg, intimately. When Mr Diamond left Barclays, he recruited John Vitalo, a former head of Barclays Middle East and North Africa and before that the head of Absa Capital, the African investment banking business, as Atlas Mara’s chief executive.
Other senior Atlas Mara staff include Mike Christelis, head of treasury and markets, who used to work at Barclays Capital in Africa; Chris Severson, head of planning and a former senior executive in the controls department at Barclays investment bank; and Richard Muller, head of integration, who was a chief operating officer for Barclays Middle East and North Africa.
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Atlas Mara has a presence in seven countries and aims to reach fifteen in sub-Saharan Africa. Among its assets are the Union Bank of Nigeria and BancABC, which is based in Botswana.
The vehicle, which is listed in London and is worth £330 million, would be unable to buy all Barclays’ African assets on its own. In the past, Mr Diamond has talked to potential investors in the Middle East and Asia about buying the business, in which they could invest alongside Atlas Mara or via a separate vehicle set up by Mr Diamond.
Mr Diamond has not had any specific conversations about possible deals since Barclays confirmed on Tuesday that it would put its holding in the region on the block as it focuses on shrinking its business and boosting its returns. Among the countries he may especially covet are Kenya, Ghana and Uganda.
However, along with funding problems, Mr Diamond faces difficulties with the structure. Barclays owns almost all its African business through the Johannesburg-listed Barclays Africa Group, in which it as has a stake of 62.3 per cent. The next largest shareholder, with 5 per cent, is Public Investment Corporation, a fund manager owned by the South African government, while STANLIB, another South African investment manager, and Old Mutual, both own about 2 per cent.
The group’s 14-strong board, most of whom are not connected to Barclays, is unlikely to agree to break up the business. That would leave Mr Diamond with the option of buying a slice of BAGL, which he may not want to do.
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“We have not been approached by Bob Diamond. We have an enviable franchise across the African continent, we have no intention of selling,” the group said yesterday.
An alternative for Barclays is to sell tranches of its holding. It may decide to hold on to a stake of about 20 per cent to ensure that its holding is low enough not to be caught by global regulations, while allowing it to retain exposure to Africa’s fast-growing markets .