After almost 30 years of business, the embattled banker Rajan Mahtani is exiting the industry after reaching a deal to sell Finance Bank of Zambia Ltd to Atlas Mara at 16 times less than his earlier valuation claims.
Mahtani, who has been beset by a number of scandals in recent years and is currently facing criminal charges of fraud, once claimed that he would raise $250 million for just 25% of Finance Bank’s shares, implying a $1 billion valuation. However the deal with Atlas Mara, formally announced yesterday, will entail the acquisition of 100% of FBZ, including all 63 branches and 800 employees, for just $60 million, along with up to 2.6 million Atlas Mara shares for Mahtani.
According to a report from Alliance News, Atlas Mara is very optimistic about the banking sector in Zambia.
“We are highly enthusiastic about Zambia’s long-term prospects and our ability to play a leading role in the development of financial services there,” said Atlas Mara Chief Executive John Vitalo, as quoted by Alliance News
“The acquisition of FBZ is another important step in the execution of Atlas Mara’s strategy to build sub-Saharan Africa’s premier financial institution, in part, by becoming a scale participant in our countries of operation, which this transaction will achieve for us in Zambia,” Vitalo added.
Atlas Mara, which is run by the former Barclays chief Bob Diamond and the Ugandan entrepreneur Ashish Thakkar, is building a strong network of banks in the region, including their ownership of Banc ABC, which is already active in Zambia.
On June 2, Mahtani stepped down as Chairman of Finance Bank to face his criminal charges. Finance Bank has in the past run into regulatory problems which prevented its long promised initial public offering, and was seized by the Bank of Zambia in 2010 for violating the maximum individual shareholder provision. In Malawi, the bank faced a ban for serial violations relating to money laundering.
Now that Mr. Mahtani has given up control of the core asset in his business empire and has been forcibly removed from his illegal management of Zambezi Portland Cement, observers are speculating his next move as prosecutors prepare to mount the case against him.