Barclays nets $687 million as it halves stake in Absa Group
British multinational bank Barclays Plc has sold a 7.4 percent shareholding in former African unit Absa Group Ltd for $687 million, effectively diluting its holding by half.
The lender priced an accelerated placing of 63 million shares at $10.88 each, according to a statement Thursday. That was a 7.3 percent discount to the Johannesburg-listed stock’s Wednesday close. Barclays gathered enough investor orders to cover the sale within minutes of opening the book, terms seen by Bloomberg showed.
Barclays had a 15 percent holding in the African lender before the sale. The British bank, which has had a presence in Africa for more than 100 years, has been steadily shedding off its stake in Johannesburg-based Absa in recent years. It sold off much of its controlling stake in the group, then Barclays Africa Group, in 2017.
The placing is estimated to result in an increase of approximately 10 basis points to Barclays’ CET1 ratio, a key measure of capital strength, as of December 31, 2021.
The net proceeds from the deal will be used for the group’s general corporate purposes, Barclays said in the statement. The bank’s remaining 7.4 percent stake in Absa is now subject to a lock-up restriction, which applies until 60 days after settlement.
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By the end of December 2017, London-based Barclays PLC had reduced its shareholding in Absa Group Limited, previously called Barclays Africa Group, to 14.9 percent.
In 2008, after the global financial market crisis, regulators implemented new rules to protect consumers, making it less attractive for international banking corporates to own large banks abroad. Due to this Barclays Plc decided to lower their shareholding in Barclays Africa Group.
Barclays, Absa, Citigroup Inc., Banco Santander SA and Societe Generale SA are arranging the share sale.