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* South Africa's PIC in talks with Barclays on BAG stake
* Talks about PIC increasing its stake in BAG -source
* PIC not part of a consortium looking at BAG stake -source
By Tiisetso Motsoeneng
JOHANNESBURG, May 4 (Reuters) - South Africa's state pensionfund is talking to Barclays Plc about buying some ofthe stake which the British bank is selling in its Africanbusiness, a source with direct knowledge of the matter said.
Barclays Plc is selling down its 62 percent stake, which isworth some $5 billion, in Barclays Africa Group (BAG)under a plan by new Chief Executive Jes Staley to simplify thebank's structure and generate higher shareholder returns.
The Public Investment Corporation (PIC), Africa's largestfund manager with more than $122 billion of South Africangovernment employee pension assets under its custody, is thesecond-biggest shareholder in BAG with a holding of about 6percent.
"There are discussions going on about the PIC increasing itsstake in Barclays Africa," the source said, declining to benamed because the matter is private. "There's no PIC-ledconsortium. It's just the PIC,"
Barclays declined to comment.
The PIC is the second investor to show interest in BAG,which runs South Africa's biggest retail bank, after a sourcetold Reuters last month that Atlas Mara has teamed upwith private equity group Carlyle to prepare a bid.
However, any deal involving a private equity player couldface regulatory opposition from South Africa's central bank.
"As a regulator, we would not be comfortable with privateequity play for any of the banks," deputy governor Kuben Naidoosaid at a press conference in Pretoria on Tuesday. He did notcomment on any specific bank.
Valued at $330 million, Atlas Mara was set up by formerBarclays Chief Executive Bob Diamond, who has confirmed that hisfirm has already lined up funding for an offer, withoutelaborating on what form the financing would take.
($1 = 14.8052 rand) (Editing by Alexander Smith)
