Barclays weighs sale of 16% in African unit
The sale, complicated after two ratings agencies cut SA’s credit rating to junk in April, could still raise as much as $1.5bn, say insiders
Barclays plc is weighing the sale of a 16% stake in its Africa unit on the market once it gets regulatory approval to separate from the business, say people with knowledge of the plans.
The sale could raise as much as $1.5bn based on the current share price of Barclays Africa Group, they said. The stock would probably be sold via an accelerated bookbuild offering. Barclays could decide to amend the size of the sale after receiving the go-ahead.
"This story is speculative and wrong," a spokesman for the bank said.
Barclays is seeking to sell down its remaining 50.1% stake in its African business to less than 20% in order to deconsolidate the unit from its accounts, releasing capital that can be invested elsewhere in the business.
CEO Jes Staley decided to reduce the lender’s presence on the continent in favour of supporting a trimmed-down investment bank focused on London and New York.
The latest phase of the sell-down was delayed after President Jacob Zuma fired finance minister Pravin Gordhan — who had given provisional approval to a separation deal that involved the UK lender paying its subsidiary £765m — and replaced him with Malusi Gigaba, one of the people said.
The bank did not know when he would sign off on the arrangement. A Treasury spokesman was unable to immediately comment.
Barclays said on February 23 it had applied for permission from South African bank regulators and the finance ministry for its stake to drop below 50%.
The sale had been complicated after two ratings agencies cut SA’s credit rating to junk in April, causing local bank stocks to plummet, the people said. Barclays Africa fell to its lowest level since July 2016 in the week after Gordhan was fired and has a market value of R124bn.
A year ago, Barclays raised $879m when it disposed of a 12.2% chunk at a discount of about 11% to the average share price over the prior 30 days. About 40% went to local investors including the Public Investment Corporation, with the rest bought by international fund managers.
Deconsolidating Africa will boost Barclays’s common equity Tier 1 ratio, the key measure of capital strength, by at least 0.75 percentage point from its 12.5% level at the end of March, the bank estimates.
The company took a £884m writedown on the division in the first quarter.