Barclays Africa Group Raises $400m in International Bond Sale

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Barclays Africa Group Limited, to be renamed Absa Group Limited, has successfully raised US$400 million in capital for the business in what was the Group’s first dollar-denominated bond sale in the international market in more than ten years.

Barclays Africa Group, like all banking organisations, needs to raise capital from time to time, to fund normal corporate activities and to ensure that it maintain the healthy levels of capital that regulators require banks to maintain. Bond sales are one of several ways in which Barclays Africa Group and other companies raise capital.

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A Barclays Africa Group team met with more than 40 investors in one-on-one meetings in London, Hong Kong and Singapore last week to present the company’s credentials and strategy in order to promote the investment opportunity to a broad array of foreign investors.

“The team’s marketing effort was paramount to the success of the transaction,” said Group Treasurer Deon Raju, adding that foreign investors have a wide range of competing investment options from which they can select. “Choosing an optimal execution window and accelerating the timing of execution were also key to the success of the effort,” he said.

More than 140 investors across Asia, Europe, UK and the offshore US placed orders for Barclays Africa Group’s bonds. The total investor demand of roughly US$1.5 billion for the bonds far exceeded the volume Barclays Africa Group wished to raise, signaling strong investor confidence in the future of the company.

The outcome of the capital raising effort is positive for Barclays Africa Group, both in terms of the total volume of the capital that the group was able to raise, and the pricing achieved, said Raju. This inaugural bond issuance and listing on the London Stock Exchange has also laid an important foundation for future funding access for the Group in pursuit of its growth strategy, added Raju.

It is worth noting that the bonds issued were only the second-ever Basel III compliant dollar-denominated Tier 2 notes issued out of South Africa. The reference to ‘Basel III’ means that our bonds meet some of the most stringent regulatory capital requirements in the world. ‘Tier 2’ refers to the type of capital being raised – in this case, it is designated as supplementary capital.

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