Barclays Plc said it sold about one-fifth of its stake in Barclays Africa Group Ltd. for about 13.1 billion rand ($879 million) as part of Chief Executive Officer Jes Staley’s plan to overhaul the British lender.
The bank sold 12.2 percent of shares to money managers, leaving it with a holding of 50.1 percent, it said in a statement on Thursday. The shares were bought for 126 rand each, a discount of about 11 percent to the average price over the past 30 days, according to data compiled by Bloomberg. The sale is expected to increase Barclays’s common equity Tier 1 ratio, a measure of financial strength, by about 10 basis points.
“This represents an initial step towards delivering management’s previously stated strategy to sell down its stake in Barclays Africa Group to a level that will permit regulatory de-consolidation over the next two to three years,” Gary Greenwood, an analyst at Shore Capital Group Ltd., who rates Barclays a buy at 162 pence, said in a note. Barclays will only be able to reap significant capital benefits from the process once its stake drops below 20 percent, he said.
Staley, who took over last year, 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 parties that’s expressed an interest in the African business 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. Diamond would combine the business with his African-banking company Atlas Mara Ltd.
Shares in Barclays Africa fell as much as 4.2 percent to 129.05 rand, and were trading 3.1 percent down at 130.52 rand in Johannesburg. A close at this level will be the lowest since April 7. The stock has declined 8.7 percent this year, the biggest drop among South Africa’s four biggest banks, which includes FirstRand Ltd. and Old Mutual Plc’s Nedbank. Barclays rose 0.6 percent to 163.35 pence in London.
“Given the size of the placement, the price seems about right,” said Garth Mackenzie, the founder of Johannesburg-based Traders Corner. “Book builds happen in an auction type process so this price was determined by the level of demand in the market.”
All of the remaining shares in Barclays Africa held by the U.K. bank will be subject to a 90 day lock-up period, according to the statement.
South Africa raised doubts over Diamond’s potential offer for a stake in Barclays Africa when the central bank said on Tuesday that private-equity bidders for the country’s third-largest lender would face opposition from regulators. Under present rules, an investor seeking to buy more than 15 percent of a South African lender needs approval from the South African Reserve Bank, while the purchase of a controlling stake will need the consent of the finance ministry, according to the central bank.
The Public Investment Corp., Africa’s biggest money manager, would be a major investor in the sale, buying as much as 1.2 percent of shares, Barclays said Wednesday.