Barclays Africa Group Limited has expressed an interest in acquiring Unity Bank PLC, a second-tier Nigerian commercial bank listed on the Nigerian Stock Exchange.
The board of Barclays Africa Group led by CEO Maria Ramos sent an Expression Of Interest Letter to the board of Unity Bank PLC and the Central Bank of Nigeria, offering to buy out shareholders in a deal that values the company at N87.6 billion ($438 million).
Barclays Africa Group will pay Unity Bank PLC shareholders 75 kobo ($0.005) per ordinary share, representing a 50% premium to Unity Bank’s current share price of 50 kobo ($0.003).
Barclays has been seeking a re-entry into Nigeria’s banking sector. Last year, the bank applied to the Central Bank of Nigeria for an Investment Banking license for approval to convert its representative office in Lagos to a full-fledged banking business, but Barclays also seeks to make a re-entry into the Nigerian commercial banking space through the acquisition of a commercial bank.
This would be Barclays’ second foray into Africa. In 1925, Barclays Bank acquired the Colonial Bank of Nigeria and changed the bank’s name to Barclays Bank DCO. In 1969, Barclays Bank DCO was incorporated in Nigeria, as Barclays Bank of Nigeria Limited, to comply with new banking laws enacted in 1968. In 1971, the shares of the bank were listed on the Nigerian Stock Exchange. In the same year, 8.33% of the bank’s shares were offered to Nigerians. The following year, the Federal Government of Nigeria acquired 51.67% ownership of the bank, leaving Barclays Bank Plc. of London with 40% ownership. In 1979, Barclays exited Nigeria by selling its 40% stake to Nigerian individuals to comply with banking and investment laws which the government enacted.
Unity Bank of Nigeria has more than 30,000 shareholders and a market capitalization of $290 million. The bank swung to pretax profit of 13.63 billion naira ($68 million) in 2014 versus a pretax loss of 33.63 billion naira in the previous year. The bank’s revenue rose to 62.63 billion naira from 52.19 billion naira.
Chief Executive Officer, Barclays Group Africa, Maria Ramos, says: “Unity Bank PLC is a leading Nigerian commercial bank with a solid track record. It is profitable and has incredible prospects for future growth, particularly with its current focus on financing indigenous Nigerian farmers. Barclays is seeking a re-entry into the Nigerian commercial banking space and our strategy is to acquire a lender that is not extremely large, but profitable in the short term. Unity Bank is that bank.”
The offer is subject to Central Bank of Nigeria, Stock Exchange and shareholder approval as well as other conditions.
Barclays Africa Group, which currently has commercial banking operations in fifteen African countries, is targeting Nigeria owing to its “huge population, appreciable gross domestic product and resilient economy,” Ramos added.
“Unity Bank PLC is a unique company with a strong track record, but it faces increased competition from commercial banks with greater scale and financial firepower,” said Temi Ofong, Head of Investment Banking for Barclays Africa Group.
“It has become increasingly clear that improving on its position in the Nigerian commercial banking market will require Unity Bank to partner with the appropriate partner that brings complementary skills and strengths in commercial banking,” Mr. Offong said.