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BARCLAYS Plc is weighing the sale of a 16 percent stake in its Africa unit on the market once it gets regulatory approval to separate from the business, inside sources say.
The sale could raise as much as $1.5 billion based on the current share price of Barclays Africa Group, they said. The stock would probably be sold via an accelerated book build 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 percent stake in its African business to less than 20 percent 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 sale, complicated after two ratings agencies cut South Africa’s credit rating to junk in April, could still raise as much as $1.5 billion, say insiders.
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 £765 million — and replaced him with Malusi Gigaba, one of the sources said.
The bank did not know when he would sign off on the arrangement.
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 percent.
The sale had been complicated after two ratings agencies cut South Africa’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 R124 billion.
A year ago, Barclays raised $879 million when it disposed of a 12.2 percent chunk at a discount of about 11 percent to the average share price over the prior 30 days. About 40 percent 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 percent level at the end of March, the bank estimates. The company took a £884 million write down on the division in the first quarter. — Bloomberg
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