Diamond Bank has got a major capital boost with Carlyle (CG) Group LP staking $147 million in the bank, which has been one of he most vastly-improving fianancial institutions in the country.
According to Bloomberg News, Carlyle, the world’s second-largest manager of investment alternatives to stocks and bonds, bought the stake through its sub-Saharan Africa Fund at the recently held rights issue by Diamond Bank.
The Carlyle fund has invested almost $300 million in sub-Saharan countries including Nigeria, Mozambique, Zambia, Tanzania and the Democratic Republic of the Congo since 2011, Diamond Bank said.
It is using Diamond Bank as a foothold as seeks to to expand in Africa’s largest economy.The bank sold shares in August as it sought to raise N50.4 billion ($284 million) for investment in infrastructure, branch expansion and lending. The bank has established some visble branches in many business districts across Nigeria.
However, Diamond Bank share price was unchanged at N5.50 per share on the Nigerian Stock Exchange (NSE), valuing the lender at almost N80 billion.
The stock has declined by 21 per cent this year compared with the 18 per cent retreat by the NSE All-Share Index.
Carlyle Group, based in Washington, has $203 billion of assets under management, Diamond Bank said.
New York-based Blackstone Group LP is the largest alternative-asset manager.
Carlyle said it was particularly bullish on the Nigerian financial industry, which it considers “under valued”.
The share price of most Nigerian banks has dropped between 15 and 25 per cent since January amid a broader sell-off in Lagos. The banks have suffered in part because of new regulation that has forced some of them to raise extra capital through hard currency bonds and right issues.
Carlyle bought into Diamond Bank through a larger $300m rights issue.
A report by Financial Imes cites Uzoma Dozie, chief executive at Diamond, as saying that the bank would use the money to increase domestic lending. Although the bank could participate in the consolidation of the west African financial sector, he said that Diamond was so far concentrated on an organic growth strategy in and around Nigeria.
Carlyle’s private equity business has been one of the largest investors in leveraged buyout transactions over the last decade.
Since its inception, Carlyle has completed investments in such notable companies as Booz Allen Hamilton, Dex Media, Dunkin’ Brands, Freescale Semiconductor, Getty Images, HCR Manor Care, Hertz, Kinder Morgan, Nielsen, and United Defense.
The firm has more than 1,400 employees including 650 investment professionals, with offices in 33 countries globally.
Carlyle has investments in over 200 companies and more than 250 real estate investments. Carlyle’s portfolio companies employ more than 650,000 people worldwide.
Diamond Bank announced last week that the rights issue was 100 per cent subscribed.
8,685 million ordinary shares were issued, which raised the bank’s current number of outstanding shares to 23,160 million.
“The successful rights issue clears the capital overhang which has surrounded Diamond Bank over the past 24 months.
“Overall, we believe this should be viewed as positive news for Diamond in an environment where macro concerns continue to dominate and capital regulations for the Nigerian banks have tightened significantly.
“Considering that Actis divested of its stake during the rights issue period, we look forward to seeing the post-rights shareholding structure and any updates on board composition,” Adesoji Solanke of Renaissance Capital had said.
