Barclays to Offer 12% Stake in Africa Unit in First Sale

  • South Africa's Public Investment Corp. to take 1.2% of shares
  • Initial sale comes as former Barclays CEO Diamond readies bid

Barclays Plc is selling about one-fifth of its stake in Barclays Africa Group Ltd. as Chief Executive Officer Jes Staley accelerates his overhaul of the British bank.

The Public Investment Corp., Africa’s biggest money manager, will be a major investor in the placement of 103.6 million shares, or 12 percent of issued stock, London-based Barclays said Wednesday in a filing. PIC will buy as much as 1.2 percent of the total shares, according to the statement, adding to the 5.3 percent it already owns.

“This is an important first stage of our sell-down and keeps open both strategic and capital markets options for the remainder of our 50.1 percent shareholding,” the bank said in an e-mailed statement. “We have had interest from numerous potential investors.”

Staley, 59, announced on March 1 the bank was retreating from Africa with other measures to raise cash, shrink globally and lighten its capital burden. One of the interested parties circling is former Barclays CEO Bob Diamond, who is readying a bid via a consortium of investors including U.S. private-equity giant Carlyle Group LP, seeking to combine the business with his African-banking company Atlas Mara Ltd.

Regulatory Hurdle

The decision to sell Africa hasn’t rallied the shares, which still trade at about half the bank’s book value, driven in part by a decision to cut the dividend for the next two years to conserve funds. The stock fell 1.4 percent in London to 162.45 pence at the market close.

The U.K. lender owns about 62 percent of Barclays Africa and has said it plans to reduce its ownership to less than 20 percent, at which point it can deconsolidate the business and direct the capital to other units.

Staley said in a March 10 interview that while he’d like to maintain a stake in the African business, he’d consider an offer for the bank’s entire holding. The South African central bank said today it will “look quite negatively” on a private-equity buyout for the country’s third-largest lender, especially if any deal involved leverage and exit strategies. Regulators prefer long-term commitments from shareholders with deep pockets, the central bank said.

Under present rules, an investor seeking to buy more than 15 percent of a South African lender needs approval from the Reserve Bank, while the purchase of a controlling stake will need the consent of the finance ministry.

Barclays bought South African bank Absa in 2005 and then built it up under former CEOs John Varley and Diamond, eventually acquiring its parent’s operations in eight African nations, giving Barclays a presence in 12 countries on the continent with 12 million customers.

Barclays’s own investment bankers are leading the accelerated bookbuild, which starts immediately, assisted by JPMorgan Chase & Co., Citigroup Inc. and UBS Group AG, according to the statement.

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