South Africa | PIC in Talks to Create Group to Bid for Barclays Africa Stake

Johannesburg, South Africa, Capital Markets in Africa: The Public Investment Corp., Africa’s biggest fund manager, said it’s forming a group of black investors to buy a stake in Barclays Africa Group Ltd. in a bid to ensure the bank comes back under the control of South Africans.

“There are discussions with institutional investors managing black money, such as pension funds,” Dan Matjila, head of the Pretoria-based PIC, said by phone on Monday. As yet it’s difficult to say how much of a stake the group may bid for because “we don’t have the check book to take it all, but we are looking at foreign partners too,” he said.

Britain’s Barclays Plc holds 50.1 percent of the South African bank and plans to reduce that stake to raise cash. The South African Reserve Bank has said it wants bank owners to have stability, deep pockets and long-term plans. Ex-Barclays Chief Executive Officer Bob Diamond said in April he and investors including U.S. private equity giant Carlyle Group LP are working on a potential bid. Dubai-based Abraaj Group is also planning a bid, people familiar with the matter said on May 15.

The PIC has held talks with Diamond, Matjila said, declining to comment about whether the money manager would be willing to invest alongside him. The PIC would need to determine if Diamond is a good partner should Barclays be prepared to sell the unit to him, the Financial Times reported, citing Matjila. It would be good to have offshore money supporting the transaction because of its size, he was cited by the London-based newspaper as saying.

“We want a structure with permanent capital,” Matjila told Bloomberg News on Monday. Like South Africa’s FirstRand Ltd., which is controlled by a holding company made up of its founders, “a holding company structure works better. The cost structure works better and the holding company can then hold related businesses like insurance or asset management. That’s most desired, but requires a lot of cash,” he said.

It’s unclear whether or not the likes of Abraaj or Carlyle would be able to offer permanent capital, according to Matjila. The PIC would like the deal to happen quickly and Barclays wants to fix their regulatory issues as quickly as possible, he said adding that there have been discussions with South African billionaire Patrice Motsepe’s African Rainbow Capital, “but nothing is firmed up.”

The PIC oversees almost 2 trillion rand ($128 billion) and manages the bulk of the South African Government Employee Pension Fund’s money. Barclays Africa rose 0.5 percent to 141.80 rand by 9:21 a.m. in Johannesburg, valuing a 50.1 percent stake at about 60 billion rand.

Source: Bloomberg Business News