Bob Diamond’s banking venture

Bob Diamond’s new African banking venture raised $325m when it listed on the stock market this week. The controversial former boss of Barclays has personally invested $16m in the cash shell, called Atlas Mara Co-Nvest.

Diamond co-founded the company with Ashish Thakkar, a 32-year-old billionaire with a wide range of business interests in Africa. Thakkar himself has invested $4m. The cash shell aims to buy a majority stake in an African bank within 12 months. If that doesn’t happen, the money will be returned to shareholders.

What the commentators said

The most likely target for Atlas “would be a small, possibly family-run, bank in sub-Saharan Africa”, said City AM. Atlas would then aim to scale up the business across several countries. And while Diamond’s name “may be mud with the public… the money men think it still sparkles”, said James Moore in The Independent.

The listing “was greeted by a deluge of money” due to excitement about Africa’s potential. The continent has a population of a billion, but only a quarter have bank accounts, and just one in 20 has a credit card.

However, warns Lex in the FT, “that potential will not be easy to realise. Established banks such as Standard Bank have seen wide fluctuations in profit. Africa is not a one-way ticket”.

There’s also the risk that shareholders who get in too early could be heavily diluted as new shares are issued in the future. Atlas could finance future deals this way, while Diamond and Thakkar will each be handsomely rewarded with further shares if a deal is done and the Atlas share price rises by at least 15%.

Investors have been burned by exotic cash shells before, noted The Daily Telegraph. Take former mining cash shell Bumi – investors who bought when that one listed have lost more than 75% of their money.

Ironically, the business was drastically restructured on the very day that Atlas listed. Given the problems created by the likes of Bumi, “it is a surprise that the London market is welcoming such vague cash shells with open arms”.


Claim 12 issues of MoneyWeek (plus much more) for just £12!

Let MoneyWeek show you how to profit, whatever the outcome of the upcoming general election.

Start your no-obligation trial today and get up to speed on:

  • The latest shifts in the economy…
  • The ongoing Brexit negotiations…
  • The new tax rules…
  • Trump’s protectionist policies…

Plus lots more.

We’ll show you what it all means for your money.

Plus, the moment you begin your trial, we’ll rush you over THREE free investment reports:

‘How to escape the most hated tax in Britain’: Inheritance tax hits many unsuspecting families. Our report tells how to pass on up to £2m of your money to your family without the taxman getting a look in.

‘How to profit from a Trump presidency’: The election of Donald Trump was a watershed moment for the US economy. This report details the sectors our analysts think will boom from Trump’s premiership, and gives specific investments you can buy to profit.

‘Best shares to watch in 2017’: Includes the transcript from our roundtable panel of investment professionals – and 12 tips they’re currently tipping. The report also analyses key assets, including property, oil and the countries whose stock markets currently offer the most value.