04 June 2017, Dar es Salaam/London — British banking giant Barclays PLC said yesterday it has further reduced its stake in its South African operations as part of a global strategic re-think unveiled last year.
Barclays said in a statement that it had placed a stake of 33.7 percent in Barclays Africa with institutional investors, raising some £2.224 billion (2.5 billion euros, $2.9 billion).
Barclays, which has decided to focus on its two core markets of Britain and the United States, now holds a stake of just 16.4 per cent in the unit.
It does want to pull out completely, however, and will hold on to a stake of 15 percent, it said.
Speaking in Johannesburg yesterday in a teleconference that also went live in all the countries where the bank operates, Barclays Africa Group chief executive officer Maria Ramos said the deal was conducted through what came out to be the largest bookbuild in the history of South Africa.
Book building is a process used by companies during share issues or floats to ask the investment market at what price the shares should be sold. The method is often used as an alternative for raising funds when other options are not desirable.
Initially, the plan was for Barclays Bank PLC to remain with a 22 per cent stake by the overnight bookbuild were oversubscribed and sold to a mix of existing and new investors, both South African and internationally.
The massive participation – which signals that investors’ appetite for the banking group is still strong – forced Barclays Bank PLC to offload more and bring down its stake to 16.6 per cent.
“The completion of this transaction demonstrates an exceptional healthy investor appetite for Barclays Africa and our strategy of becoming a leading standalone financial services group in Africa,” said Maria Ramos.
The book building outcomes mean that Barclays PLC is no longer the controlling shareholder of Barclays Africa Group, which now has a diverse shareholder portfolio made up of supportive, long-term, institutional and individual investors. Barclays PLC will remain an important shareholder.
Barclays Africa Group operates two commercial banks in Tanzania. They are Barclays Bank Tanzania and the National Bank of Commerce (NBC).
While Barclays Bank Tanzania is a wholly-owned subsidiary of Barclays Africa Group, the South African banking giant owns a controlling stake in NBC.
The Government of Tanzania has a 30 per cent stake while the World Bank’s International Finance Corporation (IFC) owns a 15 per cent stake.
Last month, NBC issued Sh1.2 billion as a dividend to the government. The money came from NBC’s 2015 and 2016 profits. In 2015 and 2016, NBC posted a profit of Sh12 billion and Sh14 billion respectively.
Barclays Bank Tanzania – which registered a loss of Sh9.8 billion during 2016 – woke up to register a Sh4.1 billion profit before tax during the first quarter of 2017.
The management of Barclays Africa Group believes its two subsidiaries are in Tanzania to stay.