Barclays Africa sale – an update

On 1 March 2016 Barclays PLC announced its intention to reduce its shareholding in the Barclays Africa Group Limited (BAGL). A year later, BAGL clams to have made significant progress. Barclays PLC intends to sell the majority of its shareholding in BAGL over a period of two to three years.

In an update sent on 23 February 2017, BAGL noted that Barclays PLC had submitted an application to the South African Reserve Bank (SARB) for approval to reduce its shareholding in BAGL to below 50%. As of 27 February, Barclays PLC was still awaiting a decision by SARB and the Minister of Finance Pravin Gordhan on whether the sale can get the go-ahead. A decision is required before Barclays PLC can undertake any further transaction.

BAGL offered the following update as to the sale buy Barclays PLC to date:

• Barclays PLC sold 12.2% of BAGL in May 2016 to a range of investors.
• Barclays PLC and BAGL announced on 23 February 2017 that they agreed the terms of separation. The key points are:

o   Barclays PLC will make a £765 million (about R12311.81 million) contribution to BAGL primarily to help cover related costs including operational separation and branding.

o   BAGL will be able to continue using the Barclays brand at its operations outside of South Africa for three years after the reduction of PLC’s shareholding below 50%.

o   Barclays PLC will contribute an amount equivalent to 1.5% of BAGL’s market capitalisation (about R2.1 billion at Dec 2016 values) towards a black economic empowerment ownership scheme.       

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Further reading:

• Barclays Africa: A potential buyer

• Should you invest in Absa if Barclays exits?