Financial services companies in South Africa have largely recovered from the Covid-19 shock, with their share prices and business activities back to pre-pandemic levels.
The first transaction relates to Absa, whose former parent company, Barclays, continues to shed its shareholding in the bank. UK-headquartered Barclays announced that it had sold a major chunk of its remaining stake in Absa, offloading 63 million shares in the South Africa-based bank. Barclays raised R10.3-billion in the process.
Barclays often discouraged Absa from aggressively pursuing new consumer segments, mainly the low-income segment. Capitec has embraced this segment, helping it to become the number one bank in South Africa in terms of customer numbers . Absa has 9.6 million customers in its retail and business banking in South Africa.The shares were sold at R164 per share, representing a 7.3% discount to Absa’s closing price of R177 as of Wednesday 22 April.
“Banks have recovered well from the pandemic. Their share prices have recovered and they were prepared for the pandemic as they made big bad debt provisions. Now is the best time for Barclays to sell down its Absa shareholding and raise a lot of money from the sale,” McCurrie toldIn a separate transaction in the financial services industry, Old Mutual has proposed to launch a black economic empowerment share scheme that will boost its black ownership from 25% to 30%.