Barclays wraps up Africa

VALUE OF STAKE IT WILL SELL TO PIC AND OTHER LARGE INVESTORS After a breakthrough in talks, the Public Investment Corporation has agreed to pick up a hefty stake in Barclays Africa.

Barclays says it will sell shares worth £1.5 billion (R37.7 billion) in Barclays Africa Group, marking another stage in its exit from the continent to focus more on the US and Britain.

Barclays said it would sell the shares to large investors, including the Public Investment Corporation (PIC), in its second such sale since the British bank announced early last year its intention to offload most of its African business. Barclays is partly relying on funds raised from the sale to meet capital requirements that were identified as a concern by the Bank of England in a November “stress test” aimed at gauging its ability to withstand financial shocks.

The deal “represents a key milestone in the execution of our strategy and the restructuring of Barclays”, Barclays CEO Jes Staley said on Wednesday.

South Africa’s Finance Minister Malusi Gigaba had approved the deal, Absa Bank, which forms the bulk of Barclays Africa Group, said earlier. Barclays is also selling Barclays Bank Egypt and Barclays Bank of Zimbabwe, which sit outside Barclays Africa Group.

Barclays shares rose as much as 3% in London on Wednesday before giving up those gains.

The bank said it would sell 187 million shares in Barclays Africa, with the PIC acting as an anchor investor to buy 59 million of the shares. Based on Barclays Africa’s closing price of R139 a share, the market value of the stake being sold is around £1.52 billion.

The British bank said in March last year it would sell most of its 62.3% stake in Barclays Africa Group.

This latest sale should reduce its shareholding to about 28%, with the bank aiming eventually for a stake of 15%.

Barclays is giving itself two to three years to complete the sale. It sold 12% into the market in May last year via an “accelerated bookbuild” process.

However, the bank has since failed to sell any more shares, hindered by the regulatory delay and political upheaval in South Africa. Barclays Africa shares have fallen by 2% in rand terms since the group’s parent company announced its intention to sell in March 2016.

Barclays will pay its African subsidiary £765 million to cover the costs of the separation, the bank said in a separate statement, confirming an announcement made in February.

It would also contribute about £110 million towards the establishment of a broad-based black economic empowerment scheme, Barclays said.