Barclays Plc Africa exposure at 14.9%

This represents its desired long term shareholding in Barclays Africa

LONDON-based banking group Barclays Bank Plc has reduced its ownership of Barclays Africa (BAGL) to 14.9 percent in line with its plans set in motion last year to lower its exposure to the continent.

“Barclays has indicated that this represents its desired long term shareholding in Barclays Africa and that no further sales are planned at this time,” the company said on Friday.

Barclays Plc, which has had a presence in Africa dating back 100 years, last March unveiled its intention to sell down its 62.3 percent interest in the African business, owing to regulatory changes in the UK.

It also indicated at the time its focus would be on two divisions, Barclays UK and Barclays Corporate and International.

Last May Barclays Plc sold 103.6 million shares in BAGL in a book build, that saw it reducing its shareholding to 50.1 percent.

As sweetener, Barclays Plc committed to contribute 1.5 percent of BAGL’s market capitalisation, about R1.85 billion, based on BAGL’s share price of R145.95 as at May 30, 2017, towards the establishment of an empowerment scheme.

This reduced shareholding to to 21.9 percent in September.

In June the BAGL stake dropped to 23.4 percent from 50.1 percent in an overnight book build with a further 7 percent to be taken up by the Public Investment Corporation (PIC) at a later date, following receipt of the necessary regulatory approvals.

Barclays Plc sold 285 691 979 Barclays Africa ordinary shares at a price of R132 per share with the aggregate gross sale proceeds being about R37.7bn.

The PIC is a 7.52 percent shareholder in BAGL.

The transfer of the further 7 percent stake in Barclays Africa to the PIC was subject to regulatory approval, the company said on Friday.

The PIC, however, did not have all the regulatory approval to buy the extra 7 percent.

The PIC in June confirmed its participation as an anchor investor in the placing for approximately 59 million shares, representing 7 percent of BAGL’s issued share capital.

PIC chief executive Daniel Matjila in a previous report confirmed that it would be buying the shares.

Matjila in the report admitted that the PIC was eyeing a much bigger slice, saying that the intention was to get more, but it was prevented from doing so by regulatory issues that prohibited it from taking a bigger stake.

It has agreed to contribute R12bn, primarily to fund the investments required for Barclays Africa to complete the separation from Barclays Plc.

The contribution would, in part, go towards investments in technology, rebranding and other separation projects.

Asief Mohamed, the chief investment officer at Cape Town-based Aeon Investment Management, said that it was not unexpected for Barclays to cut its stake.

“Profit from Africa will decrease further from a Barclays Plc perspective.”

Moody’s Investors Service last week placed on review for downgrade the Baa3 long-term local- and foreign-currency deposit ratings of the five largest South African banks, including Absa.

The rating agency has also placed on review for downgrade the Ba1 long-term local- and foreign-currency issuer ratings of Standard Bank and BAGL.

BAGL delivers corporate and investment services to 14 African countries. Its shares rose 1.41 percent to close at R160 on the JSE on Friday.