Barclays Africa returning to nationalistic roots as Black SA control nears

Only those who know history will appreciate the deep irony in news SA’s Government-run PIC is keen to fund a black takeover of “for sale” Barclays Africa. In the early 1990s, the company then known as the Amalgamated Banks of SA (ABSA) was created through the mega-merger of two building societies and two banks. It was the brainchild of fiercely anti-establishment United Building Society MD Piet Badenhorst. But soon after making the hard yards, Badenhorst was ejected with power shifting to the previous managers of Volkskas, a bank established in 1934 to promote the interests of Afrikaners. When Afrikaners achieved political power in 1948, Volkskas became the de facto banker to the public sector. After 1994, the newly created ABSA lost virtually all of that business. The group, now known as Barclays Africa but still 85% reliant on ABSA, has worked hard at regaining its special relationship with Government. Among concrete steps was gifting former ANC heavyweight and Gauteng Premier Tokyo Sexwale his first billions via a massive grant of share options; and the subsequently appointment of ANC loyalists including Gill Marcus and Maria Ramos to top positions. Barclays Plc’s sale of the control it acquired in 2005 offers a unique opportunity for the organisation to become the focus of another nationalistic gesture. With the PIC having shown its hand to the Financial Times of London, the ultimate execution can only be a matter of time. ABSA’s executive committee, only one of whom is a black African, will have their excitement about becoming the State’s banker tempered by justifiable concerns about their own career prospects. – Alec Hogg  

By Andrew England and Joseph Cotterill in Pretoria

The Public Investment Corporation, South Africa’s powerful state-owned pension fund manager, is considering putting together a consortium of black investors to take a controlling stake in Barclays Africa.

Dan Matjila, chief executive of PIC, which has about $117bn under management, told the Financial Times that Barclays’ decision to sell its Johannesburg-based African subsidiary provided the “best opportunity for us to create a black-controlled bank”.

A Barclays logo is pictured outside the Barclays towers in Johannesburg December 16, 2015. REUTERS/Siphiwe Sibeko
A Barclays logo is pictured outside the Barclays towers in Johannesburg December 16, 2015. REUTERS/Siphiwe Sibeko

He added: “I don’t want to go public on the details, but the idea should be black investors clubbing together to buy a reasonable share and we will be part of that to create the first black controlled bank.

“That would be most desirable – we are not there yet.”

South Africa’s most powerful and influential investor is already a leading shareholder in Barclays Africa Group Limited. It increased its stake to 7.3 per cent when it snapped up a tenth of the shares sold in an accelerated bookbuilding earlier this month. That reduced Barclays’ stake in its African business from 62 per cent to slightly more than 50 per cent.

Barclays Africa is one of the “big four” banks that dominate South Africa’s financial sector. There has been a perception that a “black-controlled” bank would better serve the country’s black majority population and help address some of the economic imbalances created under apartheid.

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Patrice Motsepe, South Africa’s first black billionaire, has also expressed an interest in acquiring a stake in Barclays Africa, according to two bankers involved in talks for him to lead a consortium of investors. Mr Motsepe made his fortune in mining, but last month launched African Rainbow Capital, with the aim of focusing “on financial services and private equity in South Africa within a pan- African context”.

ARC has not commented on the speculation, and Mr Matjila declined to give details of who might be involved in a consortium. However, he said he had spoken to Bob Diamond, Barclays’ former chief executive whose Altas Merchant Capital venture has teamed up with US private equity group, Carlyle, as part of another consortium keen to buy the Africa subsidiary.

Mr Matjila said Mr Diamond would have to secure exclusive talks with Barclays to have more formal discussions, but did not rule out working with him.

“If Barclays is prepared to sell to Diamond, we have to assess if he’s a good partner as well,” he said. “It will be good to have also offshore money coming in because this is not a small stake.”

Read also: Django Davidson: Barclays shorting Africa – No worse time to sell

The PIC, which manages funds on behalf of the Government Employees Pension Fund (GEPF), owns the equivalent of about 12 per cent of the market capitalisation of the Johannesburg Stock Exchange, but rarely takes controlling stakes in companies.

However, there is an increasing push by the government to create black industrialists and support the development of black businesses, with the corporate sector still dominated by the white minority.

Mr Matjila said the PIC could look to use an investment in Barclays Africa to advance black economic empowerment (BEE) by offering shares in the bank to the 1.2m members of GEPF through a special investment vehicle.

“If you talk BEE, that is the angle that we are going to look at – to allow them to participate in this structure as shareholders,” he said. “With a retail offer directed towards the members of the GEPF, and then we will finance it with their money one way or the other.”

Copyright The Financial Times Limited 2016

(c) 2016 The Financial Times Ltd.

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