Barclays Plc on May 31 confirmed that it will off-load a further approximately 22% stake in Barclays Africa Group Ltd., reducing its stake to roughly 28% from 50.1%.
The share sale will be carried out through an accelerated bookbuild placing of about 187 million Barclays Africa shares to institutional investors, open with immediate effect. South Africa's Public Investment Corp., the biggest pension fund manager in Africa, has agreed to acquire 59 million shares, representing a 7% stake in Barclays Africa, although its participation is subject to regulatory approval.
The final number of shares to be placed, and the placing price, will be agreed at the end of the bookbuilding process, with results to be announced as soon as possible thereafter.
Barclays Africa shares closed down 4.76% at 139 South African rand apiece May 31, news of the transaction having leaked before it was announced. At that price, the shares being offered by Barclays would be valued at roughly 25.99 billion rand.
Under a plan announced in 2016, Barclays intends to reduce its stake in Barclays Africa to under 20%, the level below which it can deconsolidate the business from a regulatory perspective. It noted that its target long-term shareholding in Barclays Africa is around 15%.
Barclays also said it signed the terms of a separation agreement reached in February with Barclays Africa, following regulatory approval of the share sale by South Africa's finance minister. The agreement includes the payment of £765 million from Barclays to Barclays Africa, of which £27.5 million has already been paid and of which the remainder is due at the conclusion of a sale that takes Barclays' stake below 50%.
Barclays will also contribute the equivalent of 1.5% of Barclays Africa's market capitalization, or £110 million as of May 30, toward the establishment of a broad-based black economic empowerment scheme.
Barclays also noted that it expects to generate a roughly 75-basis-point accretion to its group common equity Tier 1 ratio once the deconsolidation of Barclays Africa takes place.
Barclays Bank Plc, through Barclays Investment Bank, is acting as lead global coordinator for the transaction. Citigroup Global Markets Ltd., Deutsche Bank AG, London branch, and UBS Ltd. are acting as co-global coordinators, and J.P. Morgan Securities plc and Morgan Stanley & Co. International plc are acting as joint book runners. BNP Paribas and Société Générale Corporate & Investment Banking are acting as co-book runners.
Barclays' remaining stake in Barclays Africa after the share placing will be subject to a 90-day lockup restriction that takes effect from settlement of the transaction.
As of May 30, US$1 was equivalent to 13.12 South African rand.