Monday, August 15, 2022

Barclays Plc takes first steps to sell down

BARCLAYS has taken the first step on the road to selling down its 62% stake in Barclays Africa (Absa). The traction with which Barclays Plc has gained in the short period of time in respect to selling its majority shareholding in Barclays Africa Group Limited (BAGL) proves its commitment to rebuild itself outside its historical association with Africa. 

The period of sale will take place over the next two to three years. Within two months following the news, the first tranche of the Barclays PLC shares in BAGL have been sold. The UK Bank disclosed that the share was sold at a price of R126 per share through an accelerated bookbuild placing (the “Placing”), raising aggregate gross sale proceeds.

Bank of Botswana publicised that the shares were sold to a mixture of existing and new investors. “A total of 103 592 491 ordinary shares (representing 12.2 percent of BAGL) were sold at a price of R13 053 million. As a result of this transaction, Barclays PLC stake in BAGL has been reduced to 50.1 percent,” states BoB. The Central Bank highlights that Barclays Plc still retains a controlling stake in BAGL and that there is no change in the ownership and control of Barclays Bank of Botswana Limited by BAGL. The current 50.1 percent stake is a bite less than the original 62.3 percent stake. The notification by the Central Bank is consistent with the Bank of Botswana Act, which mandates it to monitor developments of the sale so as to maintain the safety and soundness of local Barclays Botswana operations.

Botswana is among 12 of the African countries across the continent under which BAGL has a control in. BAGL established a presence in Botswana in 1950, 25 years after it set its foot in the continent in 1925. It is not surprising that with such an entrenched local presence customers were unnerved by the disinvestment, a situation which forced Barclays Botswana to move and ease the panic. The bank explained at the time that Barclays Plc’s divestment was not out of loss of confidence in the Africa market, but rather to mitigate against the effects of recently introduced regulatory burdens specific and particular to Barclays Plc as a UK headquartered and globally significant financial institution. BoB reiterated the continuing presence of Barclays in Botswana emphasising that the bank is well capitalised, liquid, profitable and has sound operations as a company incorporated in the country with its own capital. 

With the first 12.2 percent of the tranche complete, the seemingly hurried sell down is set to continue. Barclays Plc earlier cited that it will sell to “a level which will permit us to deconsolidate it from an accounting and regulatory perspective, subject to shareholder and regulatory approvals if and as required.” Following the first sale the UK Bank noted that the completion of the transaction demonstrates a healthy investor appetite for BAGL, with the book covered multiple times. 

It is not known with certainty if the disinvestment by Barclays Plc out of BAGL is a direct response to the loss of confidence and lack of commitment to the continent, as critics have advanced, but it is evident that the UK Bank is unswervingly making the changes, which have been described to carry more liability than return. 



Read this week's paper