Bob Diamond's investment vehicle Atlas Merchant Capital has teamed up with major U.S. buyout firm Carlyle Group to put together a bid for Barclays PLC's stake in Barclays Africa Group, two people familiar with the situation said on Sunday 24 March, as reported by The Wall Street Journal, (and other wires).
Atlas Mara, Diamond's African banking group which he co-owns with entrepreneur Ashish J. Thakkar, won't be making a solo bid for Barclays Africa Group because its market capitalisation at London's AIM index, at roughly USD 300m, prohibits it from bidding for such a large entity, a person familiar with the situation said. Barclays PLC owns 62.3% in Barclays Africa Group and is seeking to sell down most of that for regulatory reasons, with U.K. banking regulations making it increasingly burdensome for large banks to own assets in multiple jurisdictions and Barclays' sale of the African unit will cut the rising costs of complying with this regulation, the bank said. Analysts estimate the bank will need to sell a stake worth roughly USD 3bn, making it a massive banking asset for the African market.
It will be interesting to see how the Barclays PLC sale plays out, but this would certainly be the first notable potential bidder to have come to the fore, if the rumours are true. A new parent, and potentially more aggressive one, in our view would be a positive for many of Barclays’ African subsidiaries, where the long established institutions, while solid, have in many markets seen more nimble peers able to generate higher returns as they displayed less conservatism without the somewhat “overbearing” risk aversion of a PLC type parent. A more locally driven strategy could thus herald a new lease of life for growth for these institutions as they navigate the nuances of the changing African financial services landscape.
By: Momentum SP Reid Securities (A subsidiary of MMI Group).
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