ATLAS Mara co-founder Robert Diamond said a tougher economic climate and lower asset valuations in Africa are a buying opportunity.
Risk appetite for investors “should be, and is greater now than it was” in good times, Mr Diamond, who has been buying stakes in African banks as CEO of Atlas Mara, said yesterday at the Bloomberg Africa Business and Economic Summit in Cape Town.
“We think that the story is the same story. This is just a better entry point.”
Weaker demand from China and a slump in commodity prices have damped the outlook for economic growth in most African countries and weighed on currencies in the region.
Nedbank CEO Mike Brown echoed Mr Diamond’s comments that this was an opportune time for investors.
“You’ve seen certainly some countries battling with the lower commodity prices and so you’ve got some bumps in the road,” Mr Brown said.
“What it provides some long-term investors with is a wonderful opportunity to get in. We continue to look to grow our African businesses.”
With eight banks in seven African countries, Atlas Mara’s “big priority right now” is to turn its 32% stake in Union Bank of Nigeria into a majority holding, Mr Diamond told Bloomberg.
Nigeria has all but fixed the naira at 197-199 /$ since it plunged to a record low in February last year by using a series of restrictions on foreign-exchange trading to counter a drop in oil prices that account for the bulk of government revenue and export income.
Muhammadu Buhari’s government is trying to counter the slowest economic expansion since 1999 by raising spending by 20% in 2016 to $31bn.
“There’s no question that Nigeria has huge potential,” Mr Diamond told the conference. “They are facing headwinds. They’re really clamping down on corruption. They’re really improving their ability to collect taxes.
“We’re seeing in the short-term improvements and corrections under Buhari, which will have a very positive impact in the long term,” he said.
After investors slated Atlas Mara’s performance, he began a $10m share buyback programme on November 3. The stock has fallen 12% this year.
“We felt that it was a good sign of confidence when people were disinvesting in Africa in the third quarter of last year,” Mr Diamond said of the buyback.
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