Barclays To Boost Absa Stake In $2.1 Bln Transaction

Barclays Plc. (BARC), the second-largest U.K. bank, said it will increase its stake in Absa Group Ltd. (ASA) to 62.3 percent and combine most of its African operations with the Johannesburg-based lender to boost growth across the continent.

Barclays, which owns 55.5 percent of Absa, will receive 129.5 million shares worth 18.3 billion rand ($2.1 billion) in return for merging operations across Africa with the bank, according to a regulatory statement today from Absa. After the deal, Absa will be renamed Barclays Africa Group Ltd., it said.

Barclays bought 54 percent of Absa in 2005 for $4.5 billion to expand in emerging markets. The bank’s existing Africa business comprises interests in banking operations in countries such as Botswana, Ghana, Kenya and Zambia. The deal is expected to be completed in the first half, it said in the statement.

“Everyone wants to get into Africa and Absa will acquire a great portfolio of Africa assets in growing markets,” Patrice Rassou, head of equities at Sanlam Investment Management in Cape Town, said in an e-mailed response to questions today. “They will have a lead on others in terms of serving South African corporates expanding into Africa.”
Absa gained 0.4 percent to 142.3 rand at 9:38 a.m. in Johannesburg.

Robert Diamond, who resigned as Barclays chief executive officer in July after the lender was fined for manipulating global interest rates, sought to boost the British bank’s profit by combining Absa and Barclays’s products and customer bases across more than 10 African countries. Together the banks have more than 40,000 staff on the continent, which has 1 billion people and faster growth rates than developed nations.
As much as 80 percent of its adult population don’t yet have bank accounts.

“Bringing together Barclays Africa with Absa is an important step in furthering our ‘One Bank in Africa’ strategy and the goal to become the ‘go-to’ bank across the continent,” Antony Jenkins, Barclays chief executive officer, said in the statement.

Bloomberg