Barclays raises $687m from Absa shares sale

·2-min read
Barclays  The logo of South Africa's Absa bank is seen outside an Absa branch in Cape Town, South Africa, March 10, 2020. Picture taken March 10, 2020. REUTERS/Mike Hutchings
Barclays had a 15% holding in the African lender before the sale. Photo:Mike Hutchings/Reuters

Barclays (BARC.L) has raised £526m ($687m/€629m) after selling a 7.4% stake in its former African unit Absa (ABG.JO), cutting its holding by half.

The UK bank said it had sold 63 million ordinary shares of Absa Group Ltd. at 164 South African rand ($10.91) a share. The sale price is a 7.3% discount to Absa's closing price of 177 South African rand on the Johannesburg Stock Exchange on Wednesday.

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Barclays said the net proceeds of the sale “will be used for general corporate purposes of the Group.”

Following the sale, Barclays will own 63 million shares in Absa, or 7.4% of its issued share capital.

The bank’s remaining stake in Absa is now subject to a lock-up restriction, which applies until 60 days after settlement.

Barclays has been offloading its position in the African lender since 2017, when it sold off much of its controlling stake in the group, then called Barclays Africa Group. Before this latest sale, the British bank had a 15% holding in the Johannesburg-based institution.

Barclays shares were were little changed following the announcement.

The deal is estimated to increase Barclays CET1 ratio by ten basis points, on a pro forma basis, at 31 December 2021, and a loss on sale of £43m through the income statement.

The CET1 ratio is a key metric that compares a bank’s capital against its risk-weighted assets to determine its ability to withstand financial stress.

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Absa, one of South Africa's largest banks and financial services groups, fell as much as 6.5% and was trading 5.8% lower in early trading.

The placing was made through Barclays Principal Investments subsidiary, with Absa, Citigroup, Banco Santander and Société Générale arranging the sale.

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