The former Barclays boss has stumped up $16m of his own cash, invested through a company he owns, to set up Atlas Mara.
He has joined forces with African billionaire Ashish Thakkar, who has also provided $4m of funding.
Atlas Mara Co-Nvest is a shell organisation which aims to acquire an existing bank and expand it rapidly. It is understood a likely target would be a small, possibly family-run, bank in sub-Saharan Africa which could then be brought up to scale and operate more efficiently across a range of states.
Diamond and Thakkar recruited investors by arguing there is strong potential for growth in the market, as African financial services have been starved of resources thanks to European lenders retreating to home markets in recent years.
They have given an initial one-year deadline to make the acquisition. If no purchase has been made by then the directors will either wind the company down or try for another year.
Citigroup ran the book while lawyers from Greenberg Traurig and Maher also advised on the deal.