Atlas Mara, the Africa-based, London-listed investment firm co-founded by former Barclays CEO Bob Diamond, is struggling to make money.
Diamond founded the firm with partner Ashish Thakkar in late 2013, and it has previously been profitable, making a net gain of $9 million before taxes in the same period last year.
However, Atlas blamed a variety of factors for swinging to a loss at the start of 2016, putting much of the company’s struggle down to problems in the FX markets, where a strong dollar helped hurt African currencies. South Africa’s rand took a particular pounding from the dollar in 2015.
The investment firm also blamed troubles in the Zimbabwean economy, and the cost of certain M&A deals as drags to profitability. Problems in southern African countries like Zimbabwe hit Atlas the hardest, with its operations there losing $6.3 million. Given that both the west and east Africa segments of the business made profits, it is clear to see where the drag on Atlas’ results came from.
Here’s a brief summary of the key numbers from the results:
- A loss of $2 million before tax; $6.7 million (£4.55 million) after tax.
- Total revenues of $51.9 million (£35.2 million), up from $44.3 million (£30 million) in the previous year.
- A return on equity of -0.3% compared to 1.4% in 2015.
- Loss per share of $0.09.
- In 2016, Atlas Mara expects to make a full year profit of more than the $11.3 million (£7.6 million) made in 2015.
While Diamond and Thakkar founded the company, they are not in day-to-day charge of operations, with the chief executive role taken by John F. Vitalo, another former Barclays banker, who prior to joining Atlas Mara was the CEO of Barclays’ Middle East and North African business.
In a statement released alongside the results Vitalo said (emphasis ours):
The result for the first quarter were broadly in line with our expectations and accorded with the indications we gave to the market at our 2015 full year earnings release. However, this level of performance is clearly below where we want to be, notwithstanding the challenges of a more difficult economic backdrop and the full impact of weaker exchange rates across our markets.
We have clear cost reduction plans and revenue initiatives to ensure that the group is positioned to tackle current headwinds. We remain committed to delivering increased profitability for 2016 relative to 2015, although we expect the year to be one of uneven quarterly performance with improving profitability over the course of the year as we execute on our focused initiatives.
In its trading update, Atlas made no mention of the group’s plans to bid for parts of Barclays’ African business.
In April, Atlas Mara confirmed that it was looking at buying parts of the operation after Barclays said in March that it would sell down its 62% stake in Barclays’ Johannesburg listed business, thanks to rising regulatory pressures. The unit is worth around 122 billion South African rand (£5.9 billion $8.5 billion) in market cap.
The sale is part of a larger programme of consolidation from Barclays, as new chief executive Jes Staley looks to focus on the bank’s central businesses in the UK and the USA.
Atlas Mara, founded by Diamond and billionaire Thakkar, says it wants to be “sub-Saharan Africa’s premier financial institution” and would use any acquisition of Barclays’ assets to gain a foothold in the notoriously fragmented African banking sector.
Investors in the company, which is listed in London haven’t reacted positively to the news, and at around 8:30 a.m. BST (3:30 a.m. ET) shares are down around 1% to 4.9 pence.
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