Saturday, December 3, 2022

Barclays set for share split

Barclays Bank of Botswana, the largest bank on the Botswana Stock Exchange ( BSE), might be on the verge of a share split in an attempt to bring its share price closer to the retail investors pockets, insiders and analysts said Friday.

Barclays’ share price hit P 27.00 by mid-last week breaching the market projected valuation of P 26.98 per share, prompting serious boardroom tongue wagging about the possible share split.

“ An investment in BBB can also be viewed from a trading perspective. Boards of DCI (Domestic Company Index) companies tend to propose a share split when its price reaches P 20,” a leading Banking analyst, Kudzani Pickup of African Alliance said in his research issued last month.

“I think a share split at the current prices of P 27 is very, very, very real,” he added on Friday.
His comments were supported by a broader fraternity of analysts, including some of the well placed senior staff within the bank, who said that “ they are currently considering various options”, including the possibility of a share split. In 1999, Barclays embarked on a share split of five-for ÔÇôone when its share price reached P 20 but it was later followed by First National Bank, Standard Chartered Bank, the second and third largest companies on the BSE. Their split was on ten-for- one.

The projected move is also helped by the new companies’ act which allows companies with a par value of less than one thebe to embark on a share split.

“The current share price is beyond the retail investors as they can not afford the minimum block of shares. For them to afford a minimum of shares, one has to fork-out P 2.700, which is totally beyond ordinary people, and a share split will help in that regard,” chief executive officer of Stockbrokers Botswana, Geoff Bakwena, said.

Barclays, which has had a static movement in its share price since February 2002 when it dropped from P 19 per share to P 13, rose towards the close of its half year results this year as investors developed an appetite for the sector after the Bank of Botswana announced that it would restrict the sale of BoBcs to commercial banks. The move sparked a growth in deposits ÔÇô driven by the treasury divisionÔÇö closing the six months period as of the end of June at over P 4 billion.

The share price started to climb from June 20 this year when it jumped from P 19.42 to P 21 and later accelerating to P 27.

“ I think a share split will be good for the market because it will improve that tradability of the stock,” Alphone Ndzinge, an analyst at Investec Botswana said.

Further, sources within the bank said Friday that they are currently engaged in an extensive discussion around the company’s share price and they are looking at a number of options ÔÇô including a share split.

Meanwhile, Sefalana Holdings, one of the market movers for the year, is also considering a share split which will have to be cleared at its next AGM.


Read this week's paper