Barclays PLC (LON:BARC) Could Sell 16% Stake in Barclays Africa Group Ltd (JSE:BGA)

Barclays
Photo: Barclays Logo / Credit: Flickr (Creative Commons)

Barclays PLC (LON:BARC) is planning to sell a 16% stake in Barclays Africa Group Ltd (JSE:BGA) on the market, Bloomberg News reported, citing people with knowledge of the company’s plans.

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Barclays owns over 50% stake in South Africa-based Barclays Africa Group Limited that is listed on the JSE Limited.

The global financial services giant could generate up to $1.5 billion through the sale of the stake, based on the current share price of Barclays Africa Group, the people said. The stock could be offered through an accelerated bookbuild offering, they said.

Barclays is seeking a regulatory approval to sell its stake in its African business, according to the unnamed people, who added that the bank could change the size of the sale after getting the approval.

Barclays Africa Group Ltd (JSE:BGA) is engaged providing financial services. It offers personal and business banking, credit cards, corporate and investment banking, wealth and investment management, and Bancassurance.

According to the Bloomberg report, Barclays PLC (LON:BARC) intends to reduce its stake in Barclays Africa to less than 20% from 50.1% “in order to deconsolidate the unit from its accounts, releasing capital that can be invested elsewhere in the business.”

Last year, Barclays sold a 12.2% stake for $879 million. The stock was bought by local investors including The Public Investment, Africa’s biggest money manager.

In its shareholder presentation of its first quarter results, Barclays reported a goodwill impairment of £884 million against its holding in Barclays Africa Group. The bank noted the impairment was largely driven by a 17% decline in Barclays Africa Group’s share price from December 31, 2016, to March 31, 2017.

Barclays said this was primarily due to the 17% drop in Barclays Africa Group’s share price over the quarter.

Shares of Barclays PLC (LON:BARC) closed down 0.39% on Friday. The stock is down nearly 8% year-to-date. During the last 12 months, BARC has surged just over 27%.

Shares of Barclays Africa Group Ltd (JSE:BGA) closed down 1.10% on Friday. The stock has been struggling in 2017, down over 14% so far this year. During the last 12 months, BGA has jumped nearly 8%.

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