Funding hinders PIC plans for Barclays Africa

Plans by the PIC to form a group made up of black shareholders to buy a stake in Barclays Africa are being hindered because the SA investors are struggling to raise financing.

Johannesburg/London - Plans by the Public Investment Corporation to form a group made up of black shareholders to buy a stake in Barclays Africa are being hindered because the South African investors are struggling to raise financing, according to people familiar with the matter.

Read also: PIC in talks to create group for Barclays Africa bid

While Dubai-based Abraaj Group was also planning a separate bid, it has lost interest and is no longer in talks with Barclays, two of the people said, asking not to be identified because the deal was private. Abraaj had allowed an exclusivity agreement to lapse so that the British lender could sell down its stake through a share sale in the market in May, the people said.

Delays with pulling together the funding mean Barclays will probably sell stock in the Johannesburg-based unit on the South African market, two other people said. The PIC, which owns about 6.4 percent of the country’s third-largest lender, may participate in a share sale for its own account, one of the people said.

Spokesmen at the Pretoria-based PIC, Barclays Africa, London-based Barclays and Abraaj declined to comment.

Empowerment push

A sale to black investors would help meet South Africa’s push for increased black ownership of industries to address the legacy of whites-only rule that deprived the black majority of economic opportunities. Half of Barclays Africa would be valued at about R63 billion ($4.3 billion).

The PIC, which manages pensions for government employees and as Africa’s largest money manager has about R1.85 trillion in assets, said in May it’s forming a group of black investors to ensure the lender remains in local hands. The South African Reserve Bank has cautioned potential investors it wants owners of the country’s banks to have stability, deep pockets and long-term plans, saying in May it will look negatively on a private-equity bid.

Ex-Barclays Chief Executive Officer Bob Diamond said in April he and investors including US private equity giant Carlyle Group were working on a potential bid. While Diamond’s group has held talks with the PIC, no decision has been made on whether they would work together, one of the people said. A spokesman for Diamond’s Atlas Mara didn’t immediately return a message left with his office on Friday seeking comment.

Barclays plans to further reduce its 50 percent in the South African bank following an accelerated book build in May that cut its holdings from 62 percent as part of Chief Executive Officer Jes Staley’s plan to retreat from the continent and raise cash to reduce its capital burden. The bank was restricted from selling more shares in the African business by a 90-day lock-up period that ended in August.

* With assistance from Stephen Morris

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