“Where in the world is there exceptional growth? Where in the world is the financial services industry disaggregated and in need of operational excellence and investment? And where do I have experience? Asked Bob Diamond, and answering his own question, “Africa just jumps right off the page.”
He might have added “where can I no longer take the kinds of risks I am used to taking without being hauled in front of the risk committee” (answer: everywhere but Africa) and maybe “where can I take more risk because the banking industry has a far less regulated infrastructure – the answer? You guessed it, Africa.
This is not intended to be an anti-Bob Diamond piece – this blogger knows full well that they possess not one hundredth of the business acumen and eye for opportunity possessed by the recently departed Chief Executive of Barclays Bank, the man who bought Lehman Brothers in a coup which has become known as the “deal of the century”, and built the Investment Banking division at Barclays almost from scratch, displaying quite extraordinary foresight, skill, and, well, let’s call it chutzpah, for want of a better word.
Eventually forced out of the bank he had begun to define at the insistence of the Governor of the Bank of England, Mervyn King, it certainly felt at the time that Diamond had been living on borrowed time, or, in King’s words, “sailing too close to the wind on too many fronts”.
Although it was the LIBOR rate fixing scandal that finally proved to be his undoing, it is rumoured that the reining in of anything deemed to be risky activity in the aftermath of the collapse of the financial markets in 2008 (from which, it should be noted, Barclays emerged largely unscathed) did not appeal to Diamond, or to his circle of top traders, who largely upped sticks and started a Swiss hedge fund or two, where they could leverage to their hearts content, without worrying about those pesky new tier 1 and 2 capital ratios, Basel II, or collateralising every penny of the risks they were taking.
Rarely off the front pages throughout 2012, Diamond appeared before committee after committee, his slight frame and bespectacled insouciance akin to that of a mole emerging from his tunnel system for the first time since last spring, squinting apologetically yet defiantly at the mountains of dirt he had spread all over the headmasters lawn.
The reality, however, is that Diamond is a far more social animal than that; flamboyant and outgoing, Diamond’s favourite haunts were Roman Abramovich’s Chelsea, or partying at the O2 with daughter Nell, who memorably and loyally suggested that her father’s detractors could “hold my d***”, in response to her father’s very public dressing down. He was never likely to go gentle into that good night, so the question everyone has been asking is: what did Bob do next?
His latest venture, Atlas Mara, listed on the LSE in December last year, underwritten by Citigroup, and easily reached the stated target of £200m investment, indeed it was considerably over-subscribed. Seasoned investors might recognise the venture as reminiscent of Nat Rothschild’s Vallares Oil, essentially a cash shell operation raising funds in the City of London before reversing in acquisitions whose credentials, should they have attempted to list themselves, may have been highly dubious.
While Rothschild, along with Tony Hayward, the ex BP chief, went cap in hand to the Balkan oil giants, Diamond has joined forces with Ugandan Entrepreneur Ashish Thakkar and Rachel Robbins, lead lawyer for the World Bank’s International Finance Corporation, amongst others, and has identified medium sized African banking infrastructure companies as his acquisition targets. “We’re operators more than investors”, he recently told reporters in Lagos.
Diamond’s credentials, as ever, are impeccable; the former lecturer, who spent 15 years at Morgan Stanley and 26 at Barclays, has long been associated with investment in Africa, most notably at Barclays, where his successor, Anthony Jenkins, has continued to expand into the region and ironically may prove to be one of Atlas Mara’s biggest rivals, along with Standard Chartered Bank.
Diamond has started his own charitable foundation in the region, the Diamond Family Foundation, as well as investing $20m of his own cash in Atlas Mara. There is no doubt that he can make a lasting difference to the way finance is handled in a continent where only 7% of the population have a bank account, and investment banking is no more sophisticated than deposit taking, and buying treasury bonds, which can yield up to an impressive 15% as Africa catches up with the developed world.
This being Investment Banking, however, there is also a reasonable chance that Diamond could walk away from the deals altogether. The prospectus for the December ’13 fundraising is an exercise in platitudinism, with less detail than a child’s abstract oil painting. If no acquisition is made in the first year, the shareholders can vote on whether to hold on for another 12 months. If nothing has been acquired by then, well, say goodbye to a large chunk of your investment. What kinds of acquisitions will be made? Hard to say. What are the risks? Who can tell. How long will it be before we see an ROI? Don’t hold your breath.
The smart money, however, says that Diamond and his backers, whilst they may not be as pure as the driven snow, are conscientious, determined, and most importantly, know their market like a leopard knows it’s spots.
Bod Diamond, remain idle for two years? Watch.This.Space.