(Repeats story published late on Tuesday)
* Downgrades shrink pool of potential investors
* Barclays pushes back share sale plans - source
* ANC economic transformation plans cause uncertainty
By Tiisetso Motsoeneng
JOHANNESBURG, April 12 Barclays' plans
to sell its African business and pull out of the continent are
being hindered by South Africa's political upheaval and
credit-rating downgrades, according to banking sources and fund
The British bank gave itself 2-3 years to sell its
controlling stake in Johannesburg-based Barclays Africa when it
announced the plan in early 2016, and sold 12 percent last May
in an "accelerated bookbuild" - a share sale held over a short
period of time.
It had been planning another accelerated bookbuild in the
last two weeks but pushed it back because of concerns over
investor appetite due to political and economic uncertainty in
South Africa, according to a banking source familiar with the
The source, who asked not to be named as they are not
authorised to speak publicly, did not say when the deal might
now take place.
A spokesman for Barclays in London declined to comment.
South Africa has been mired in business uncertainty since
late last year when the ruling African National Congress (ANC)
pledged to radically transform the economy following losses in
local elections that were partly caused by anger over deep
inequality that persists more than two decades after apartheid.
It said it would redistribute the wealth of the country to
the black majority, but has not outlined how it plans to do so.
Investor unease increased significantly two weeks ago with
the sacking of respected finance minister Pravin Gordhan which
led to S&P Global Ratings cutting the credit rating of South
Africa and its banks to junk.
Fitch also pushed Pretoria's debt into junk territory and is
expected to also downgrade local banks in the coming days
because their large exposure to sovereign debt closely links
their credit profile to that of the government.
The downgrades have heightened the risk of a prolonged
economic stagnation and rattled investor confidence in banks,
whose performance is closely linked to the economy, wiping out
more than 132 billion rand ($9.5 billion) from their market
value in two weeks.
The pool of potential buyers to which Barclays' can sell
shares in its African business to is also shrinking, according
to bankers, because the mandates of some institutional
investors, including some pension funds, do not allow them to
hold an asset that's sliding on credit ratings.
"Barclays Plc have to make a tough call – go ahead and sell
Barclays Africa at a low enough price that will attract
investors or wait, possibly a few years, until the situation has
stabilised," said Kokkie Kooyman, portfolio manager at Dekker
Capital in Cape Town.
The British bank said early last year that it planned to
reduce its 62 percent stake in its African business to below 20
percent by 2019 as part of its plan to exit Africa to focus on
the United States and Britain.
As well as hindering its global strategy, delays in the sale
timetable could throw up regulatory problems.
Barclays is partly relying on funds raised from the stake
sale to meet capital requirements that were identified as a
concern by the Bank of England in a November "stress test" aimed
at gauging its ability to withstand financial shocks.
The lender faces the annual test again late this year, and
the British regulator could ask it to submit plans to raise
extra capital if it has not met the requirements.
Barclays is increasingly looking at selling its remaining 50
percent stake in chunks because it is struggling to find one
strategic buyer that will satisfy South African regulators,
sources have previously said.
Barclays Africa earns more than 80 percent of its revenue in
South Africa, but also operates in nine other including Kenya,
Ghana, Botswana and Mozambique.
It has been hit hard by the economic uncertainty and credit
downgrades in South Africa, along with domestic peers Standard
Bank, Nedbank and FirstRand. They are
heavily dependent on wholesale funding sources such as bonds,
whose costs have surged following the downgrades, and exposed to
the effects of economic problems such as rising unemployment.
South Africa's "top four" banks have shed between 7 and 13
percent over the past two weeks.
Faced with possibility of losing more supporters in the 2019
national elections, the ANC party has pledged to overhaul the
economy, with the central plank being the redistribution of
wealth, but has not disclosed details of its plans.
The policy is aimed at winning back core voters in a country
where black people make up 80 percent of the 54 million
population, yet the lion's share of the economy in terms of
ownership of land and companies remains in the hands of white
people, who account for around 8 percent of the population.
"Banks are paying the price for political uncertainty that
we've seen in the country over the past two weeks," said Ron
Klipin, a fund manager at Cratos Capital in Johannesburg.
"As an investor, when you hear words like 'radical economic
transformation', it creates some uncertainty in terms of the
economic policy, in terms of further downgrades and the cost of
funding for banks."
($1 = 13.8876 rand)
(Additional reporting by Lawrence White in London; Editing by