Inside Barclays’ plan to sell Absa

UK banking group Barclays is preparing to start selling off its majority stake in Barclays Africa – known as Absa in South Africa – according to IOL.

The group announced in March 2016 that it would be exiting its Africa business, of which it controls a 62% stake.

Barclays said it would sell down its stake in Barclays Africa “to a level which permits accounting and regulatory deconsolidation” over the next two to three years.

The group said it will have a “non-controlling investment” in the group over time, pegged at under 20%.

According to a Bloomberg report, citing three sources involved, the banking group will sell an initial 10% stake in Absa to “several large investors”, while keeping the option to divest its entire holding.

The sale of a 10% stake could bring in as much as $740 million (R11.25 billion) for the company, the report said – with the group’s entire holding is worth as much as $4.6 billion (R70 billion).

Barclays Africa has a market capitalization of R113 billion.

The sources said the company’s options are open, and it could even retain a controlling stake – or sell everything to one buyer.

If a single buyer can’t be found, the bank will move to its initial plan of selling down to under 20%, the report said.

In its full year results in March, Absa reported growth in profits, up 10% to R14.3 billion from R13.0 billion.

Revenue grew 6% to R67.2 billion, as net interest income increased 8% and non-interest income rose 5%, while operating expenses grew 5% to R37.7 billion.

However, the group said that tough conditions in South Africa hampered its growth in the region.

More on Absa

No shortage of interested buyers for Barclays Africa: report

Fitch downgrades Barclays Africa on sale plans

Barclays Africa may already have a willing buyer

Barclays exit not because of SA economy: Ramos

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Inside Barclays’ plan to sell Absa