South Africa Group Said to Seek 10% Stake in Barclays Africa

  • Public Investment Corp. said to be among investors for stake
  • Investors want to negotiate a discount on bank's shares

A group of South African investors plan to make an offer for 10 percent of the shares in Barclays Africa Group Ltd., a person familiar with the matter said.

The consortium, which includes the Public Investment Corp., Africa’s biggest money manager, is set to meet Barclays Plc next week, said the person, who asked not to be identified because the talks are private. The investors will push for a discount to Barclays Africa’s current share price as the divestment of a large number of shares coincides with a deterioration in South Africa’s economy, the person said.

London-based Barclays is preparing to initially sell 10 percent of its African unit to several large investors, while keeping open the option to divest its entire holding, three people with knowledge of the process said on Thursday. The British lender, which owns more than 62 percent of the South African bank, said on March 1 it was retreating from the continent, where it has had a presence for more than a century, as part of a plan to raise cash, shrink globally and lighten its capital burden.

It’s not yet clear if Barclays will sell the shares in its Johannesburg-based unit on the market or via an accelerated book build, the person said. Barclays Africa rose as much as 4.3 percent, the most in more than three weeks, and was 3.4 percent higher at 134.40 rand as of 3:01 p.m. in Johannesburg.

‘Plenty of Interest’

“At these kinds of price levels I am sure there would be plenty of interest from South Africa and emerging-market fund managers,” said Adrian Cloete, a banks analyst at Cape Town-based PSG Wealth, which manages more than 300 billion rand. “A book build process, which offers shares to all shareholders and institutional investors, would be a fair way to place shares rather than offering them to a few selected institutions. Usually in a book build, the price that shares are placed at results in a small discount.”

Spokespeople at Barclays and Barclays Africa declined to comment. Sekgoela Sekgoela, a spokesman for Pretoria-based Public Investment Corp, or PIC, wasn’t immediately able to respond to questions.

The PIC, which manages the bulk of the South African government’s pension fund money and oversees more than 1.8 trillion rand ($119 billion), said in January it would be interested in a larger stake in Barclays Africa.

The bank’s presence in 12 countries across the continent would help the PIC’s African expansion plans, the money manager said at the time. The PIC already holds 5.6 percent of the lender’s stock, according to Barclays Africa’s annual report, which was published last month.

Good Thing

Barclays Africa has a market value of 112 billion rand, according to data compiled by Bloomberg. Barclays first bought a controlling stake in the South African bank in 2005 for 33 billion rand.

The interest from South African investors is a good thing for the local unit, said Harry Botha, a banks analyst at Avior Capital Markets who has a neutral recommendation on the lender.

“It reduces the possibility that Barclays would sell to another bank, which could be disruptive for Barclays Africa” by distracting management from operational issues, he said.

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