Update: Union bank jumps to 1yr high as Atlas Mara raises stake

by | February 7, 2018 3:53 am



The share price of tier-two lender, Union bank, rallied to a one-year high after financial services holding company, Atlas Mara Ltd, increased its stake in to 48 per cent, following a recent rights offering by the former.

After the deal (done on the 15th of January this year), Union bank’s share price rose 4.9 percent to N8.37 the next day from N7.98 and even rose further to a one year high of N8. 78 the day after.

Source: Bloomberg

Atlas Mara fully subscribed to the rights related to its established 44.5 per cent holding and also acquired through the issue a further 3.5 per cent stake in the bank. The total cost for maintaining and extending its shareholding in Union bank through the rights issue was $75 million, the company said.

Atlas is just 2 per cent shy of the 50 per cent mark, at which point it would have to make a tender offer for the remaining shares not held by it.

According to chairman, Bob Diamond, Atlas is pleased to have increased its stake in UBN at a time when the leading indicators for Nigeria’s macro-economic is showing some improvement.

“We remain tremendously excited about the prospects for UBN and committed to building a premier financial services platform in Africa, ” Diamond said.

Atlas first bought a stake in UBN from the Asset Management Company of Nigeria (AMCON) in 2012, and has progressively increased its holdings. It has often expressed willingness to take over UBN, which would serve as an example of its Africa focused strategy working.

Diamond’s plans in Africa could put him in direct competition with Barclays, which has had a presence there since the 1920s and is one of the biggest international banks on the continent. UBN was known as Barclays Bank CDO (Colonial, Dominion and Overseas) when it was bought by Barclays, and became Barclays Bank of Nigeria in 1969 after Nigeria’s independence, according to the bank’s website.

With a market cap of N177.6 billion, UBN made a profit after tax of N12 billion in the nine months through 2017, according to its latest financial statement.