Bob the bidder

Barclays Africa sale starts clock on Diamond bid

Bob Diamond may yet snap up Barclays' Africa arm. The UK bank has placed 12.2 per cent of its Johannesburg-listed business with institutional investors. A South African state pension fund took a tenth of the offering, which was worth $878 million, and will now own almost seven per cent of Barclays Africa Group. But that's not enough to deter the former Barclays boss from sniffing around.

The initial sell-down of Barclays' stake looks like a decent enough piece of business by current boss Jes Staley. The sale was achieved at a 6.5 per cent discount to the previous day's close, tight relative to local deals of a similar size. Although the price was actually around the shares' 12-month low, Staley now only has to sell another third of the business to get it below the level at which Barclays will achieve meaningful capital relief.

There's logic in leaving a majority stake on the table. Selling the whole lot to a strategic bidder could let Staley accelerate his strategy. But keeping more than the remaining 50.1 per cent might have allowed Barclays to drip-sell it in stages, while waiting for a bid to emerge. A lock-up restriction gives Staley 90 days to decide what to do.

Diamond has made clear his intention to swoop. Although South African central bank Deputy Governor Kuben Naidoo said on May 3 that he was opposed to private equity bidders for the country's banks, this was not a barb aimed squarely at Diamond, according to a person familiar with the situation. The consortium that Diamond has put together may include US private equity firm Carlyle. But it also includes other investors.

Barclays management could do with South African regulators hardening their resistance in private. Selling out to Diamond would be embarrassing given how hard it would be to counter the perception, however unfair, that he was getting a sweet deal. Diamond's links to Barclays' Libor shame and his huge pay packages over the years still rankle with the UK bank's shareholders and regulators.

But for now, Barclays' initial Africa stake sale seems simply to have set the clock ticking on a bid by Diamond for full control.