More certainty for Absa shareholders after Barclays halves stake

In a deal that takes Absa a step closer to removing a major overhang on its shares, Barclays sold half of its remaining stake in the SA lender for R10.5bn as part of the British bank’s stated plan to end the 17-year tie-up.

Barclays has been selling its stake in Absa since 2017 in line with its strategy to focus on the US and Europe in the wake of the increased international regulatory framework on banks following the global financial crises of 2008-2009 that shook the banking system. In 2017, it sold much of the 55% controlling stake it acquired in 2005.

In the most recent development, Barclays announced on Thursday that it sold its 7.4% stake in Absa at R164 a share, a 7.3% discount to the latter’s closing share price on Wednesday.

The share sale was conducted through the so-called accelerated bookbuild process — a share sale held over a short period of time.

For Absa, the sale takes it closer to removing a major overhang on its shares as investors have known that Barclays is a long-term seller. However, the discount to Wednesday’s close may weigh on the price.

Absa shares fell as much as 6% on Thursday, the most since early March, before pulling back to close 4.83% lower at R168.45 on the JSE, giving it a market value of R142.8bn.

“It’s a good exit point given the strong rand and the fact that banks have recovered from the Covid-19 pandemic.

“I don’t see any reason why Barclays would hold on to the remaining residual stake given that it is not part of its core strategy,” said Mike Gresty, portfolio manager at Anchor Capital.

Barclays’ remaining 7.4% stake in Absa is now subject to a lock-up restriction, which applies until 60 days after settlement.

Absa officially weaned itself off Barclays in 2018 when it rebranded as Absa Bank from Barclays Africa. Its main focus is on the core SA market, where competition has intensified with the arrival of new players in the retail banking space.

mahlangua@businesslive.co.za