ABSA Should Have Consolidated Barclays' African Operations and Listed Them Separately on the JSE

Why?

• The growth profile, risk and challenges are different and the management team running ABSA SA versus ABSA Africa need to be aligned to different incentives. Growing a R400bn book by 20% is not the same as lengthening the yield curve in Uganda and doubling a R 2bn loan book. The latter is a more volatile call option and has a longer time to maturity and should command a higher multiple.
• Injecting equity additional equity holders capital with a warehoused structure should make Mr Kruger and Mr Mboweni more comfortable.
• Everybody loves a growth story and many would have fantasized that MTN redux was beckoning in this share.
• The exchange control environment is very forgiving of such arrangements and no sterilization would have occurred.
• The share would have made a lovely partner to DRD Gold in the value swing stakes, depending on what flavor of chaos was unfolding in a key country. Traders love securities that are hard to value because there is always some profit to be made from fear and greed.

It may be too late now; the time to sell overvalued equity may have passed us by...sigh.