Barclays Said to Plan Further Sale of Shares in Africa Unit

  • Bank said to prefer accelerated book builds to reduce stake
  • Selling stake to single buyer said to face regulatory hurdles

Barclays Plc plans to continue selling further stakes in its South African business on the market after cutting its holding to about 50 percent, three people with knowledge of the matter said.

The British bank is leaning towards conducting more sales to money managers - fast, controlled offerings with little-to-no marketing - after the May 5 transaction drew demand exceeding what was was on sale, the people said, asking not to be identified as the plans are private. Selling to a single buyer may face significant regulatory hurdles, the people said.

Dubai-based Abraaj Group is leading a group of investors that plan to bid for a stake of as much as 35 percent in Barclays Africa Group Ltd., people familiar with the matter said earlier this month. That came after ex-Barclays Chief Executive Officer Bob Diamond confirmed months of speculation in April when he said he and investors including U.S. private equity giant Carlyle Group LP are working together on a potential bid.

The bank is open to selling a significant minority stake, according to one of the people.

Regulator Uncomfortable

“As a regulator, we won’t be comfortable with a private-equity play for any of the banks,” Deputy Reserve Bank Governor Kuben Naidoo said earlier this month. The central bank would “look quite negatively” on a buyout because these typically involve leverage and exit strategies, and banks need long-term commitments from shareholders with deep pockets, he said.

Barclays in London and Barclays Africa in Johannesburg declined to comment.

Barclays sold about one-fifth of its stake in Barclays Africa Group Ltd. in the market earlier this month as part of Chief Executive Officer Jes Staley’s plan to retreat from the continent and raise cash, leaving it with 50.1 percent. 

Stock Discount

The stock sold at discount of about 11 percent to the average price over the 30 days before the deal, according to data compiled by Bloomberg. Barclays, which wants to reduce its holding to 20 percent or less, is restricted from selling more shares in the African business by a 90-day lock-up period.

Barclays Africa’s directors could opt to buy back some of the bank’s stock after shareholders voted in favor of this resolution on Tuesday. According to a notice the bank published ahead of the meeting, the approval means directors could oversee the repurchase of as much as 10 percent of the stock in issue. This will give the lender “flexibility” in the year ahead, the bank said at the meeting, adding that it wants to increase the number of black shareholders and review compensation policies.

Barclays Africa’s share price was little changed in Johannesburg at 135.83 rand as of 2:51 p.m. while the U.K. bank rose 1.3 percent to 166.4 pence.

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