LONDON/JOHANNESBURG (Reuters) - Barclays BARC.L raised 603 million pounds on Thursday by selling a 12.2 percent stake in Barclays Africa Group BGAJ.J, a crucial first step in a plan to curb risk and refocus on core markets in Britain and United States.
Barclays’ retreat from Africa may include selling the remaining 50.1 percent stake to a strategic investor, with former Barclays’ boss Bob Diamond already lining up financing.
That would end more than a century of involvement by the British lender in the continent, whose growth prospects were dealt a blow in 2014 when the price of oil and other commodities - export mainstays of many African economies - collapsed.
The sale is also part of the bank’s plan to simplify its structure, shore up its balance sheet and generate higher shareholder returns. Barclays held a 62 percent holding in the company before the placement.
The sale of 103 million shares, priced at 126 rand each - a discount of 6.5 percent to Thursday’s closing price - was oversubscribed multiple times and attracted “very high quality demand” from domestic and international investors, a source familiar with the matter said.
Shares in Barclays Africa dropped as much as 4 percent before recouping some of the losses to close 2.3 percent lower at 131.60 rand.
“It does seem like a discount but it is also a large chunk of stock that is listed in an environment that has certainly been very volatile,” said Lentus Asset Management’s Chief Investment Officer Nic Norman-Smith. “It’s kind of ‘just get me out’”
Barclays did not give details of the investors who took part in the placing but a source familiar with the matter said the Public Investment Corporation (PIC) took up 10.3 million shares, or a tenth of the $876 million, the most by a single investor.
PIC, Africa’s largest fund manager with more than $122 billion of South African government employee pension assets in its custody, will now own almost 7 percent of the Barclays Africa. It was already the second biggest shareholder in Barclays Africa before the transaction.
The PIC has an option to increase its holding beyond 7 percent without seeking further regulatory approval, the source said. Investors who took part in the placement were pre-approved by the South African Reserve Bank, the source said.
The asset management arm of Anglo-South African insurer Old Mutual, a top 10 investor in Barclays Africa, was also among investors that took part in the private placement, its spokesman said.
The window may still be open for Atlas Mara, an Africa-focused financial services company, to a launch a bid for Barclays’ entire remaining stake in Barclays Africa, South Africa’s No.3 lender with a market value of 114 billion rand ($7.62 billion).
The stake is worth around $4.4 billion based on the placing price.
Valued at $330 million, Atlas Mara - a company set up by former Barclays Chief Executive Diamond - has teamed up with investors that a source has said included buyout firm Carlyle to launch the bid.
However, any deal involving a private equity player will face regulatory opposition from South Africa’s central bank, whose deputy governor Kuben Naidoo said this week the bank would not be comfortable with a private equity fund in any of the local banks.
Diamond has not elaborated on what form the financing he has put together would take.
Barclays Africa said the results of the private placement showed there was strong demand for its stock and also gave its parent options to sell in capital markets or to a strategic investor.
The deal is expected to result in a pro forma increase of about 10 basis points in Barclays’ common equity tier 1 ratio, a key measure of the bank’s financial strength. Shares in the bank, which have fallen 25 percent so far this year, closed 0.9 percent lower at 160.95 pence.
($1 = 14.9599 rand)
($1 = 0.6902 pounds)
Additional reporting by TJ Strydom in Johannesburg; Editing by Adrian Croft
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