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Correcting Apartheid Imbalances: PIC Considers Black Consortium For Barclays Africa

Correcting Apartheid Imbalances: PIC Considers Black Consortium For Barclays Africa

From FinancialTimes. Story by Andrew England and Joseph Cotterill.

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

“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,” he said. “That would be most desirable — we are not there yet.”

PIC is already a leading shareholder in Barclays Africa. It increased its stake to 7.3 percent when it snapped up a tenth of the shares sold in an accelerated book building earlier this month. That reduced Barclays’ stake in its African business from 62 percent to slightly more than 50 percent.

(Book building is the process by which an underwriter attempts to determine at what price to offer an IPO based on demand from institutional investors, according to Investopedia.)

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.

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.

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.”

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 U.S. private equity group, Carlyle, as part of another consortium keen to buy the Africa subsidiary.

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.

Matjila said the PIC could look to use an investment in Barclays Africa to advance black economic empowerment by offering shares in the bank to the 1.2 million members of Government Employees Pension Fund through a special investment vehicle.

“If you talk black economic empowerment, 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 Government Employees Pension Fund, and then we will finance it with their money one way or the other.”

Read more at FinancialTimes.