This post has been updated.
Bob Diamond, the American executive who was forced out as Barclays’ CEO in 2012, is reportedly interested in buying the British bank’s African operations. According to the Financial Times, Diamond has started preliminary discussions with investors (paywall) about raising the necessary capital.
Barclays announced on March 1 that it plans to sell its 62% stake in Barclays Africa Group Limited (BAGL) as part of a restructuring effort—and to focus on what Barclays CEO Jes Staley described as the company’s core business in the UK and US. The African operation, which is listed at the Johannesburg Stock Exchange (JSE), has been generating decent returns—healthier, at least, than that of Barclays’ investment bank—but stark losses for the company overall have forced Barclays to regroup, and volatility in Africa’s political and economic climate perhaps helped make the choice to exit the continent an easier decision to make.
Diamond, meanwhile, is keen to build in Africa. In 2013, after falling from grace at Barclays over the bank’s involvement in an interest-rate-rigging scandal, he co-founded, with the Ugandan investor Ashish Thakkar, an investment vehicle he hopes will become the next powerhouse of African banking. The company, called Atlas Mara, has investments in seven countries on the continent, with assets worth a combined $2.6 billion, it says.
As recently as Feb. 24, with rumors swirling that Barclay was about make public its decision to leave Africa, Diamond told Bloomberg that the economic headwinds of declining commodity prices and plunging currency values were not scaring him away from the continent. “This is the time we would like to accelerate our investing in Africa and not pull back,” he said.
Atlas Mara declined to comment on the story.
The ultimate coming out party
Despite the challenges of what some have described as Diamond’s road to redemption, the move to take over Barclays’ assets on the continent would be the ultimate coming out party for the London Stock Exchange-listed Atlas Mara. And analysts say this may be the ideal time to buy, with the decline of the South African rand depreciating BAGL shares by 25% over the past year.
The question is whether Atlas will be able afford to finance the purchase. The non-South African assets that Diamond is looking to acquire are worth over $2 billion—a tall order for a firm with a $330 million market capitalization. This helps explain why Diamond is looking to tap into other funding sources, with sovereign wealth funds in Asia and the Middle East among them, per the FT.
But Diamond may run into competition for the assets. South Africa’s state-run Public Investment Corporation (PIC), which manages the country’s $60 billion public pension fund, has made clear that it’s looking to increase its 5.4% stake in BAGL. Other entities that may be keen on Barclays’ African business include China’s largest bank, The Industrial and Commercial Bank of China (ICBC), which already owns a significant chunk of South Africa’s Standard Bank and could use this as an opportunity to expand its footprint in the rest of the continent. France’s Société Générale, already in 18 African countries, also could make sense as a suitor.
Even if Atlas Mara manages to overcome all these obstacles, there still remains one other issue: Is Barclays be prepared to do a deal with an executive it let go four years ago, and who was widely seen as the embodiment of a damaging culture from which Barclays is still trying to recover?
“The optics are horrible for Barclays to sell to Bob Diamond,” a banker told the FT. “They will not want to do this.”
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