Barclays exit causes panic

The dust has settled on the minor storm around Tuesday’s confirmation that Britain’s Barclays Bank intends to sell its 62.3 percent interest in the Barclays Africa Group. Photo: AFP / Niklas Halle'n

CAPE TOWN - As the dust settled on the minor storm around Tuesday’s confirmation that Britain’s Barclays Bank intends to sell its 62.3 percent interest in the Barclays Africa Group, highly respected South African businessman Christo Wiese agreed with the sentiment that it might actually not be such a bad thing.

Speaking on the sidelines of the Lex Mundi Emerging Africa Conference in Cape Town on Friday, Wiese told African News Agency it could possibly be a positive development if the Public Investment Corporation (PIC) were to step up, as had been suggested it might.

Wiese – chairman of Pepkor and Shoprite Holdings Limited controlling shareholder, Africa’s largest retailer – told ANA he was “always sorry to see a foreign investor disinvesting”, but said he understood that Barclays had its own agenda.

Other heads were not as cool. Barclays Africa management in various countries struggled to reassure investors and customers that the withdrawal of the parent did not mean the African banking operations were under threat.

On Tuesday, Barclays Africa chief executive Maria Ramos told journalists in Johannesburg the bank’s operations would not be affected at all by the Barclays Plc decision to reduce its shareholding in Africa.

ANA’s Nairobi correspondent reported that Barclays Bank of Kenya was struggling to explain to concerned Kenyans that it would not be shutting up shop in the East African country.

“It is factually incorrect that Barclays Bank of Kenya Ltd (BBK) is shutting down in Kenya. We have a clear strategy of our Kenya business and there are no plans at a local, regional, and group level to shut it down,” BBK said in a statement.

In Zimbabwe, reserve bank governor John Mangudya was reported to have issued a statement saying: “The RBZ would like to assure stakeholders that, at this stage, Barclays Plc strategy does not impact on the status of Barclays Bank of Zimbabwe Limited on its everyday operations.”

On Friday, Wiese was a panelist in a session titled “Getting Deals Through (M and A/DFI) – Structuring, Negotiating, Public Interest Obstacles” at the conference hosted by Bowman Gilfillan, South African member firm of the global Lex Mundi network of law firms.

Wiese is respected for his forthright views and wide personal experience of South African, African, and European business and investment.

During the session he had been asked about this week’s news that Steinhoff International Holdings, the retailer in which he is a major shareholder, had entered into what is being described as the second European bidding war in as many weeks.

On Wednesday Steinhoff announced that its subsidiary Conforama Group had made a 662 million pound offer for UK-based electrical retailer Darty. This bid could scupper an all-share takeover deal agreed in November with France’s Fnac, the French chain that sells music, books, and electronics.

This comes after confirmation last month that Steinhoff had had made a 1.4 billion pound counter-bid for Britain’s Home Retail Group, already the subject of a bid from Sainsbury’s.

Wiese poured cold water on speculation that starting bidding wars might be Steinhoff’s new chosen approach, reminding the audience of lawyers from jurisdictions across the world, from Botswana to Brazil and Bermuda, that business was essentially opportunistic.

He said the two so-called bidding wars were purely coincidental.

“Nobody would want two deals like that to hit you at same time,” he said.

The Lex Mundi conference had been billed as a way for legal experts to gain an understanding of the political, economic, demographic, and social drivers of Africa’s development, as well as the legal framework evolving on national and regional levels.

Wiese – who said he had decided to not tell jokes about lawyers at the forum but described himself as a “failed lawyer” – had a few words of caution for business people coming to Africa for the first time.

First and foremost, he said, would-be investors needed to get to know the territory and remember that Africa is not a country. The point that Africa is made up of 54 very diverse countries had come up a few times at the conference after being introduced by keynote speaker Donald Kaberuka, the former president of the African Development Bank.

Wiese said South Africa was a very good entry point for people wanting to do business in Africa, but he had a warning about South Africans too.

“South Africans are wonderful people but we have a couple of bad habits,” he said. “One of them is that we keeping beating up on ourselves.”

Wiese said South Africans tended to focus on the bad and forget about the good in themselves.

However, he remained very positive about South Africa and Africa and was still investing aggressively on the continent in addition to pursuing big investments elsewhere, which sometimes was the only place one could go after outgrowing local markets in particular areas of expertise.

“When a business becomes a certain size it becomes difficult to grow acquisitively in this neck of the woods unless you are happy to stray from the things you know,” Wiese said.

Ezra Davids, chairman of corporate/M and A at Bowman Gilfillan Africa Group and chair of the session, echoed this when he said that the companies had simply become too large for their country of origin.

Wiese said he thought the present downturn in the region “created wonderful opportunities for investment”.

As for the well-documented risks facing South Africa, he said: “There is an English saying that nothing concentrates the mind like a hanging in a fortnight.”

“For the first time in years we are hearing from government, and business is on board too, that we must look anew at how we do things. We have had a wake-up call,” he said.

African News Agency

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