The top team at Barclays Africa will be breathing a little easier today. News has emerged that former Barclays plc CEO Bob Diamond’s bid to buy control of the South African-based banking group has petered out. Diamond’s financial backer, US private equity business Carlyle Group, has withdrawn its commitment after being informed the SA Reserve Bank will not allow the bank to be bought for future sale. With Dubai-based Abraaj Group also having lost interest and the PIC stepping back from supporting a consortium of local black investors, Barclays Africa’s London parent is now reverting to the alternative plan of selling chunks of stock to institutional investors through the open market. The next sale is set to be announced soon. While this overhang of stock will put a dampener on the share price, it is the best possible outcome for CEO Maria Ramos’s team and, indeed, the organisation itself. Any new controlling shareholder would almost certainly have effected radical changes in management and staff in an attempt to generate a return on their investment. Such disruption doesn’t always work, and is always very costly in the short-term. With now ownership being transferred from a single parent to many investors, that risk falls away. For Barclays Plc it’s a less elegant solution, but a much more profitable one. After the Sterling’s post-Brexit dive and the recent recovery of the Rand, the UK-based group will be harvesting a lot more Pounds than originally anticipated. – Alec Hogg
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(Bloomberg) – Talks between Carlyle Group LP and Bob Diamond’s Atlas Merchant Capital LLC about a joint bid for Barclays Plc’s African unit have stalled, people with knowledge of the matter said.
Carlyle executives are concerned that Barclays might be reluctant to sell its stake in Barclays Africa Group Ltd. to a consortium including Diamond, who led the London-based bank until 2012, and that regulators would block a sale to a private-equity firm, said one of the people, who requested anonymity because the details are private.
There are also complexities related to funding the deal in a manner that would gain backing from regulators that signalled concern about private-equity ownership, one person said.
A series of groups have failed to bid for Barclays’s 50.1 percent stake in the South African lender, prompting the U.K. bank to consider selling its remaining shares on the Johannesburg Stock Exchange instead, people familiar with the matter have said. Diamond, 65, wants to combine the unit with Atlas Mara Ltd., his African banking group that’s struggling with bad loans, currency losses and mounting costs. He remains interested in buying a stake, one person said.
Read also: Barclays Africa bid: PIC-backed Motsepe vs Diamond. Local is likely winner.
Officials for Atlas Merchant in London, Carlyle and Barclays declined to comment.
‘Financial Capability’
Barclays Chief Executive Officer Jes Staley had earlier said that Diamond may lack the “financial capability” to buy the African business. Staley told a conference Monday that he had “increased confidence” in his bank’s plan to exit its African subsidiary, given strong demand for its recent offering on the Johannesburg market.
Diamond’s interest in the Barclays unit emerged in April, when he confirmed that he was seeking to pull together a group of investors, including New York-based Carlyle, for a joint bid.
“The consortium has committed long-term strategic investors,” Diamond said on a conference call in April. “The funding is in place. There is support for this potential transaction.”
Plans by the Public Investment Corp., or PIC, to form a group made up of black shareholders to buy a stake in Barclays Africa are being hindered because the South African investors are struggling to raise financing, people familiar with the matter said last week. The Dubai-based Abraaj Group, which had planned a separate bid for Barclays Africa, has lost interest and is no longer in talks, the people said at the time.
If Barclays decides to sell its remaining shares on the stock market, PIC may purchase a small stake along with other local investors, one of the people said.
