Barclays halves Absa stake
Barclays has raised R10.34bn (US$679m) by selling half its stake in South African bank Absa, cutting the UK bank's holding to 7.4%.
Barclays sold 63.1m Absa shares, representing 23 days' trading, on Wednesday evening at R164 per share through an accelerated bookbuild. That represented a 7.3% discount to the close of R177 on Wednesday.
The shares were trading at R171.55 after 1pm in London on Thursday, down 3.1%. Absa stock is up more than 16% this year and pushed above R192 in late March, a closing level not seen since 2018.
A targeted wall-cross including local money and international accounts took place during the day on Wednesday, completing with multiple times coverage on indications of interest.
The trade launched shortly after 4pm in London with reference to the close on Wednesday. A formal covered message followed within half an hour and after 6pm there was guidance that orders below R164 risked missing out before books closed at 6:30pm.
The top 10 orders took more than 50% of the stock from a multiple times covered book, with the top 20 accounts taking more than 75%. There was significant scaling back, with strong participation from fundamental hedge funds, as has been the case with a number of ABBs this year, alongside long-only support.
The shares represented 7.4% of Absa's issued share capital and leaves Barclays with 63m shares, now subject to a 60-day lock-up controlled by Barclays and Citigroup.
Barclays previously owned a 62% stake in Absa as part of its long history in South Africa but started selling its stake in May 2016 and reduced it to below 50% later that year. The sell-down has taken time, because of complex and involved negotiations with the South Africa government.
The latest sale will improve Barclays' CET1 capital ratio by about 10bp compared with the end of December. Barclays said the transaction will result in a loss on sale of £43m in its income statement but it will record a gain of £121m as "other comprehensive income" to reflect the share price gains since the end of the year.
Barclays was bookrunner for the placing. Citigroup, Absa, Santander and Societe Generale were co-bookrunners. As Barclays is the vendor it is not eligible for league table credit, while co-books is a role that does not qualify for credit, so there is no league table credit for the banks involved.