Barclays Africa Group Limited has announced that following the completion of South Africa’s largest book build in South African Rands, Barclays PLC has sold 33.7 percent of Barclays Africa’s issued share capital at a price of R132 per share. This results in accounting deconsolidation of Barclays Africa from Barclays PLC.
Barclays PLC sold 285,691,979 Barclays Africa ordinary shares at a price of R132 per share, which results in Barclays PLC reducing its shareholding to 23.4 percent, with a further 7 percent to be taken up by the Public Investment Corporation at a later date, following receipt of the necessary regulatory approvals.
The shares in the overnight bookbuild were multiple times subscribed and sold to a mix of existing and new investors, both locally and internationally. The aggregate gross sale proceeds were approximately R37.7 billion.
It was announced in March 2016 that Barclays PLC would reduce its shareholding over time. The overwhelming investor interest in this bookbuild process that took place overnight has given Barclays PLC the opportunity to expedite this process.
“The completion of this transaction demonstrates an exceptionally healthy investor appetite for Barclays Africa and our strategy of becoming a leading standalone financial services group in Africa,” said Maria Ramos, Barclays Africa Group Chief Executive Officer.
The significance of this sell-down is that Barclays PLC is no longer the controlling shareholder of Barclays Africa, which now has a diverse shareholder portfolio made up of very supportive, long-term, institutional and individual investors.
Barclays PLC will remain an important shareholder and will support Barclays Africa throughout the sell-down and operational separation processes, which are already well underway. Barclays PLC and Barclays Africa will continue to work with regulators to ensure that the sell-down and separation are managed appropriately, with no unnecessary impact to stakeholders or the business.
According to Ms. Ramos, independence from Barclays PLC will create several opportunities, which will ultimately result in benefits for different stakeholders, “This is a very exciting time for Barclays Africa. There is an opportunity for increased African ownership of our business through a planned staff share scheme as well as a broad-based black empowerment scheme that will contribute to the growth of an entrepreneurial culture”.
Barclays PLC will contribute the equivalent of 1.5 percent of Barclays Africa’s market capitalization, equating to approximately R1.85 billion (based on Barclays Africa’s share price of R145.95 as at 30 May 2017), towards the establishment of a broad-based black economic empowerment scheme.
As announced in February 2017, Barclays PLC has agreed to contribute approximately R12 billion (£765 million) primarily to fund the investments required for Barclays Africa to complete the separation from Barclays PLC. The contribution will, in part, go towards investments in technology, rebranding, and other separation projects. This process presents an opportunity to modernize and harmonize systems across Barclays Africa operations.
Ownership of Barclays and Absa operations in Africa does not change as a result of the reduction in shareholding. The 11 banks that form part of Barclays Africa will continue to be led and operated by people with deep local knowledge and a diversity of skills and experience.
Barclays PLC announced on 1 March 2016 that it intended reducing its 62.3% shareholding in Barclays Africa over time because of regulatory changes in the UK. On 5 May 2016, Barclays Bank PLC sold 103.6 million shares in Barclays Africa in a bookbuild, reducing its shareholding to 50.1%.
Ms. Ramos concluded: “This is a defining moment for Barclays Africa. We now have a significant opportunity to determine our own destiny and make our own decisions on what is right for a pan-African focused business”.