Barclays embraces its joey role in kangaroo-land

MELBOURNE, May 18 (Reuters Breakingviews) - Barclays (BARC.L) is hedging its investment banking risk Down Under. The British lending goliath has nearly doubled its stake in fast-growing boutique Barrenjoey – which means young kangaroo – to 18.2%, with a A$75 million ($53 million) injection of capital that imputes a pre-financing valuation of about A$750 million. It’s part of a sensible approach in a hypercompetitive market.

A fickle history helps explain the latest Australia strategy. Barclays exited in 2016 as part of a broader regional pullback, only to tiptoe back in 2018. Although its Asia-Pacific arm accounted for less than 5% of last year’s income, the bank secured a fresh deposit-taking licence in December to build its standalone business of helping Australian corporate clients invest overseas.

Rather than square off again domestically against powerhouses such as Macquarie (MQG.AX), however, Barclays is cosying up to the formidable upstart led by Brian Benari. Barrenjoey’s recruitment of rainmakers is starting to pay off, evidenced by its role advising on last month’s A$20 billion takeover bid for Ramsay Health Care. In an industry littered with examples of foolishly expensive international expansion, the Barclays arrangement is unconventionally measured. (By Jeffrey Goldfarb)

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(The author is a Reuters Breakingviews columnist. The opinions expressed are their own.)

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