Diamond Plans African-Loan Securitization to Lure InvestorsKevin Crowley
Robert Diamond, former head of Barclays Plc, plans to sell corporate loans in sub-Saharan Africa to international investors through his new financial-services venture, Atlas Mara Co-Nvest Ltd.
Securitizing loans will open up one of the fastest-growing regions in the world to institutional investors and provide capital to businesses operating there, Diamond, 62, said in an interview in Johannesburg yesterday.
“International investors have already crossed the Rubicon in that they’re interested in Africa,” he said. “Now it’s a question of them getting educated on how they do it.”
Diamond, who quit as Barclays CEO in July 2012 after the British bank was fined for manipulating benchmark interest rates, wants spur capital markets growth in a region where a third of the economies are expanding at more than 6 percent, according to the World Bank. Atlas agreed to buy BancABC, which offers financial services in Botswana, Mozambique, Tanzania, Zambia and Zimbabwe, for as much as $265 million and will use the company as a springboard for further acquisitions.
“We want to get lending into businesses,” Diamond said. “If it’s all just coming on our balance sheet, our growth will be limited and access to capital will be limited due to risk management. The more we can get it into institutional investors the better.”
Atlas Mara will have a capital markets platform with specialized lending and securitization units for packaging loans for institutional investors, Diamond said.
Diamond has a history of building a bank. As head of Barclays Capital, the London-based bank’s securities unit, he expanded headcount and made the company a global leader in fixed income, foreign exchange and mergers and acquisitions. Profits increased more than 10-fold to 3 billion pounds ($5 billion) in 2011.
“Barclays Capital would be investment banking,” Diamond said. “This is not that at all. This is much more retail and commercial banking where we’ll try and bring some of the other things around it.”
Most African banks invest customer deposits in local government debt and not in local companies, Diamond said. Securitizing loans would boost lending and help satiate global investor appetite for exposure to Africa, he said.
“They’re looking for opportunities to invest but they need to be comfortable they’re investing in the right things,” Diamond said. “The more we can get ratings on the banks for example, the more we can raise money. The more we can get ratings on companies, the more international investors will be attracted.”
In the seven years to 2011, Diamond earned at least 120 million pounds in pay and bonuses according to Manifest Information Services Ltd., making him a poster-boy for banker bashing. He was labeled “the unacceptable face of banking” in 2010 by then U.K. Business Secretary Peter Mandelson and “The Real Life Gordon Gekko” by the London-based Daily Mail.
Atlas Mara, which raised $325 million in an initial public offering in December, plans to buy another bank with a “multi-country platform,” high-quality management and good earnings at a reasonable valuation, Diamond said.
Diamond, who put $20 million of his own money into the venture along with Ugandan entrepreneur Ashish Thakkar, said Nigeria and French-speaking countries in west Africa are “very interesting” to Atlas Mara.