adminABCH announced on April 2 that Atlas Mara Co-Nvest Limited (Atlas Mara) was set to acquire its banking group (ABC Holdings) and its major shareholder, African Development Corporation (ADC), in a US$265 million cash and shares deal.
It was a big deal, and one that Doug Munatsi and his partners can be proud of. Over the past 15 years when there has been so much value destruction, they’ve created a banking group and sold it for enough that each one of them can retire. To sell something created from small beginnings for $210 million deserves a well done.
With Atlas Mara having highlighted that they will inject $100 million into BancABC operations subject to regulatory approval, the group will benefit immensely in terms of liquidity, capital and funding. In addition, the calibre within Atlas Mara will also add further value to the group in terms of enhancing the competitive edge of BancABC in all the markets it operates. New products, ideas and technological innovation especially on mobile banking will be some of the benefits for ABCH.
This is explained by the wealth of banking experience within Atlas Mara starting with the knowledge and expertise of Robert Diamond regardless of the 2012 Libor scandal. Ugandan billionaire Ashish Thakkar’s Mara Group, which has huge investments in technology, manufacturing and real estate interests in 19 African countries, adds to the flavour.
Although ABCH’s growth story in the medium to long term is possibly set on a new path in terms of growth and earnings, a few lessons can also be learnt. The ability by the firm to attract such international investors despite the high country risk means corporate leaders can do something to attract capital rather than blaming the environment.
Hats off again to Doug and his team for the ability to unlock such a deal as most bankers and other executives in various sectors are quick to blame the Government for unfriendly business policies.
While it is true to a certain extent that lack of friendly policies has led to low inflows of foreign capital, business leaders can, however, make a difference by being proficient in their respective lines of businesses. This is so because Atlas Mara was largely attracted by ABCH’s growth story since its formation including the geographical footprint built over the years.
For Doug himself – it’s like the last day of school. You know things are never going to be the same again. You have been working to this point since you were a six-year- old. You’ve been on this road for so long and now what? And your best friends are all set to do entirely different things.
BancABC has its weaknesses, but when you look at Doug, Francis and Beki, you can see they are all even matched and respect each other. Finding this in business is rare.
But in truth, when you write A-Levels there is no last day. There’s Speech Day and then over the next few weeks you write exams and find that when you walk out of that exam hall where do you place your emotions after those 13 years of school?
It’s interesting if you consider that both Kingdom and ABC, products of indigenous bankers, have both been bought by Mauritian companies backed by Western capital. Ultimately character and ability made Doug a good deal of money, something that alluded Nigel, who always coveted it more.
Overall, corporates may need to take a proactive approach in running their day-to-day businesses especially in an illiquid economy.
This entails strengthening their corporate governance structures, operating leaner cost structures and creating value to shareholders.
The entrance by Atlas Mara may possibly result in the introduction of new technological products and an increase in competition also likely to benefit consumers.
Policymakers especially at a time where there is low foreign capital inflows and gross capital formation may need to at least create a favourable environment for corporates to access capital.
Well done, Doug and team!
This comment was first published on a financial information and data service
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