Atlas Mara In Early Stage Talks To Buy Stake In Uganda’s Crane Bank
Atlas Mara Limited, the banking firm set up by Bob Diamond, former Chief Executive Officer at Barclays Plc is in talks to buy a stake in Crane Bank Limited, the third biggest bank in Uganda which has faced financial problems since September last year.
The financial services-focused investment firm said in initiated plans to buy stakes in the Ugandan bank last month but controversy surrounding its valuation has held back the move.
Crane Bank Limited has an asset base of $5.2 million, making it the fourth largest lender in East Africa’s second biggest economy.
The talks are at initial stage for the Ugandan bank which values itself at $300 million. Atlas Mara values the lender at $250 million, Bloomberg reported.
The Ugandan lender reported a pre-tax loss of about $2.13 million for the 2015 financial year, Stream Africa reported.
Bank of Uganda put the troubled lender under receivership last week and suspended all its board members due to a dip in performance that has been attributed to bad debts and non-performing loans.
Crane Bank Limited, which has branches in Uganda and neighboring Rwanda, is owned by Sudhir Ruperelia, who has 28 percent shares. Ruperelia is the richest man in Uganda.
Ashish Thakkar, the Atlas Mara co-founder is a Ugandan.
Atlas Mara’s plan to buy shares Crane Bank is part of the firm’s expansion across sub-Saharan Africa.
It currently has acquisitions in seven countries across the continent.
The firm, founded in 2013 made a $6.7 million loss in the first quarter this year.
Its acquisitions in Zambia and Nigeria significantly contributed to the loss. The global fall in commodity prices and struggling currencies hurt its fortunes in the two countries, where copper and oil are the major foreign exchange earners.
The move to buys stakes in the struggling Ugandan lender is likely to plunge the firm’s fortunes into more trouble in the wake of a tough economic environment that has so far faced banking industry across Africa.
Kenya, Democratic Republic of Congo and Mozambique have all put some of their banks under receivership this year.
Atlas Mara’s share price has also taken a hit since 2013, and fell to $2.90 last week, Bloomberg reported.
The firm plans to reduce its staff as part of cutting down on costs to mitigate against the turbulent times facing its acquisitions across the continent.
The move to reduce its staff by about 35 percent will save Atlas Mara $8 million, Daily News reported.
Atlas Mara also plans to enter the Kenyan market.