Barclays just confirmed that it plans to spin off its lucrative Africa banking unit.
In a statement released just before the markets close on Wednesday, Barclays said it plans to “divest part of its 62% shareholding in Barclays Africa over the next two to three years.”
Barclays will do this by selling 103.6 million worth of shares in Barclays Africa Group, with up to 10.3 million shares going to the South African state pension fund Public Investment Corporation.
“This is an important first step as we seek to reduce our shareholding in Barclays Africa to a level that achieves accounting and regulatory deconsolidation,” said Jes Staley, CEO of Barclays.
“As we said at our Q1 results, we continue to explore opportunities to reduce our shareholding, including capital market and strategic options.
“Barclays Africa is an important partner, and we are working closely with local management, including planning for the operational separation of the two businesses in a way that will preserve value for shareholders in both the Barclays and Barclays Africa groups.”
The Barclays Africa unit is worth around 122 billion South African rand (£5.9 billion $8.5 billion) in market cap. It is by far one of Barclays’ most profitable assets — returns from Barclays’ Africa unit far outstrip those of the investment bank.
For example, in 2015, return on tangible equity for Barclays Africa banking was at 11.7% compared with 6% at the investment bank. Earnings also surged 11% last year.
Meanwhile, speculation is still growing around whether Barclays’ former CEO Bob Diamond will be involved.
At the end of April, the company founded and run by Diamond confirmed that it is in talks with Barclays about buying some of the bank’s assets in Africa.
In a statement released Atlas Mara, co-founded by Diamond, says that it is “exploring an acquisition” of Barclays’ stake in the bank’s African unit.
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