Actis leads $134m investment in Nigerian bank(3)

Actis has taken a minority stake in Nigeria-based Diamond Bank, shortly after the country’s scandal-dogged elections. But despite the governance concerns, buyout firms are optimistic about the country’s economic and political future.

Emerging markets private equity firm Actis has led a $134 million (€100 million) investment into Nigerian bank Diamond, the second largest private equity transaction in the country’s history.

Actis will acquire a 19.1 percent stake, while the capital will be used to grow the bank. Actis’ two pan-African private equity funds and CDC, the UK government-backed emerging markets fund of funds, invested in the company.

Diamond Bank was founded in 1991 and is listed on the Nigerian Stock Exchange. It provides corporate, commercial and retail finance and has 117 branches across Nigeria and the Republic of Benin.

Simon Harford, head of Actis in west Africa, said: “Diamond Bank has an impressive management team that is demonstrably operating to high standards of corporate governance – a key differentiator for sustained growth which we believe will contribute enormously to the robust expansion of the Nigerian private sector.”

Harford said that the country made “remarkable macroeconomic progress” under the leadership of former President Obasanjo. However, Actis is positive about the prospects for continued healthy progress under the administration of recently elected President Yar’Adua.

President Yar’Adua was elected in April this year amidst allegations of malfeasance, vote rigging, ballot box stuffing, and non-transparent counting. Yet despite the controversy, his election marked the first democratic transferral of power from one civilian leader to another in the country’s history.

Rod Evison, from CDC, said: “The elections in Nigeria, despite the problems, are a new step in their history and in five years’ time the elections will probably be far more ordered than the ones we have just seen.” 

The largest deal in Nigerian history was the acquisition of a 77.5 percent stake Aluminium Smelter Co of Nigeria by ALSCON in February last year for $250 million, according to data provider Dealogic.

Actis has invested in Nigeria for 50 years and is stepping up its investments in the country. Recent investments include a $43 million buyout of Starcomms, a wireless telecoms operator, a $12 million minority stake in UAC, a consumer food company, and an undisclosed commitment to Palms Mall, a Lagos retail mall.

CDC is also a cornerstone investor in Actis’ funds.