Barclays bet makes Abu Dhabi 1.5bn
AN Abu Dhabi-based sovereign wealth fund sold more than 11 per cent of Barclays yesterday, pocketing a £1.5bn profit less than seven months after making its £3.5bn investment.
In an incredibly fast turn-around, Credit Suisse placed around £3.5bn of instruments – which were due to convert to Barclays shares by the end of the month – on behalf of International Petroleum Investment Company (IPIC).
The shares were sold at 265p a share, a 16 per cent discount from Monday’s close of 316.25p, but 73 per cent higher than the price at which IPIC bought them at the height of the financial crisis.
Barclays raised over £12bn in a series of deals last year to boost its capital without having to take rescue funds from the government.
Sheikh Mansour bin Zayed Al Nahyan, a member of the Abu Dhabi royal family, invested up to £4.75bn in the bank in October, later transferring the holdings to state-run investment vehicle IPIC.
IPIC said that is was selling the stake to focus on its long-term strategy of investing in energy assets. It retains a five to six per cent stake in Barclays, and said that Abu Dhabi plans to maintain a “close commercial and strategic relationship” with Barclays.
But the sale will raise fears among other Barclays shareholders that other strategic investors, like the Qatari government, could also sell their stakes after the recent rally.
“This tactical move brings into question any foreign investment in major companies – in particular investment from the Middle East,” said Manoj Ladwa, senior trader at ETX Capital. “I would expect further falls from companies with similar exposure.” Barclays shares dropped by 13.5 per cent to 273.5p.
IPIC said yesterday that it was also considering selling £1.25bn of another capital instrument in Barclays.
BARCLAYS INVESTMENT TIMELINE
July 2008
Barclays raises £4.5bn, mainly from Qatari and Asian investors, after existing investors balked at the chance to buy shares at 282p each, taking only 19 per cent of the shares offered.
September 2008
Raises £700m from a share placing and investors agree to inject £600m into the bank alongside its purchase of Lehman Bros assets.
Oct/Nov 2008
Barclays raises £7bn from investors from Qatar, Abu Dhabi and elsewhere through a range of instruments. Sheikh Mansour Bin Zayed Al Nahyan invests up to £4.75bn in instruments that could give him a 16 per cent stake and transfers to IPIC.
June 2009
IPIC sells an 11 per cent stake in Barclays for around £3.5bn.
SHEIKH MANSOUR BIN ZAYED AL NAHYAN
IPIC
Sheikh Mansour bin Zayed Al Nahyan is the brother of the ruler of the Emirate of Abu Dhabi and chairman of International Petroleum Investment Company (IPIC).
Sheikh Mansour spearheaded the £4.75bn investment last autumn, initially saying that it was a personal investment but later transferring it to state-owned IPIC.
Earlier this year IPIC bought a nine per cent stake in German car maker Daimler.
The Sheikh is a key political figure in the Middle East, with roles including minister of Presidential affairs, chairman of First Gulf Bank and a member of the Higher Council for Petroleum.
He is also is known for his love of sport, and is chairman of Al Jazeera Football Club and of the Emirates Horse Racing Authority. But this love is not confined to the UAE. Sheikh Mansour spent £210m on a 90 per cent stake in Manchester City football club in September 2008.
Estimates of the Sheikh’s personal wealth vary widely, but his entry into the Premier League was enough to knock Chelsea owner Roman Abramovich, valued at £11.7bn, off the top of the football rich list.
He is married to Sheikha Manal bin Mohammed bin Rashid al-Maktoum, daughter of Prime Minister and ruler of Dubai.