Global Economic Outlook (G.E.O)
105-Year Old Union Bank Acquired by Titan Trust Bank. Vol. 92. June 6, 2022.
105-Year Old Union Bank Acquired by Titan Trust Bank
Titan Trust Bank has acquired the majority shareholding in one of Nigeria’s oldest banks, Union bank, for about ₦191 billion, paying a premium of ₦7 per share for about 27.34 million shares. This is certainly the biggest acquisition deal in the financial space in Nigeria and is a major statement by Titan Trust Bank, a bank which only received its national banking license from the Central Bank of Nigeria in April 2019.
Titan Trust Bank is a recent addition to the Tropical General Investment (TGI) Group and represents the group’s foray into the financial services sector having established their presence in other sectors in the Nigerian economy including the Fast-Moving Consumer Goods (FMCG), Food, Agriculture, Chemicals and Pharmaceuticals. Some of the popular companies under the TGI Group include CHI Farms, Cormart, WACOT and a host of many others.
Many people have been wondering how a bank which is barely three years old could acquire a bank that is more than a century old. The truth is that Titan Trust Bank has a strong backing from the TGI Group which explains why they were able to acquire a bank of Union Bank’s standing. The United Kingdom (UK) branch of Union Bank was not included in the deal as that was divested to the existing shareholders of Union bank UK on a pro-rata basis.
The Nigerian banking sector already has many strong players and It was always going to be difficult for a new bank to navigate that space, which explains Titan Trust Bank’s decision to acquire Union Bank. The acquisition was also made easy due to the desire of the majority shareholder, Atlas Mara, to divest from the bank. Atlas Mara held close to 50% stake in the bank prior to the acquisition.
Atlas Mara is a private equity firm with a focus on the financial services sector in Africa. Private equity firms usually target companies they believe have strong prospects and can be transformed through a change of management and other reforms. They also typically have a specific time horizon for holding on to investments and that is usually between 5-10 years. It is therefore no surprise that Atlas Mara was looking to exit their investment in Union bank.
Of course, other shareholders in Union Bank including Union Global Partners were also willing to relinquish their stake which explains why the total stake sold to Titan Trust Bank was 93.41%. At the moment, there has not been any statement from Titan Trust Bank as to whether there will be a name change but that is a real possibility.
Will this acquisition deal spark new ones in Nigeria’s banking space? We can only wait and see.
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How do you see the acquisition of Union bank by Titan Trust Bank?
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The Central Bank of Nigeria (CBN) has raised the interest rate for the first time in six years. Watch this video to learn what the effects might be on individuals and businesses.
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