Posted by
alfredlester on Tuesday, October 20, 2009 9:06:53 AM
LONDON &S212; Qatar announced Tuesday that it would sell a part of its stake in the British bank Barclays after the value of its investment almost doubled.
Qatar&S217;s sovereign wealth fund said it would sell 379 million shares in the bank, exercising warrants that it agreed to buy a year ago when the bank was suffering at the height of the financial crisis.
The fund will retain a 7 percent stake in Barclays and will remain the bank&S217;s largest shareholder.
Barclays&S217; shares rose five-fold over the last eight months after the bank avoided the government&S217;s cash injection, it acquired Lehman Brothers&S217; assets in the United States and benefited from strong earnings at its securities unit.
Qatar would make a profit of about &<63;634 million, or $1 billion, on the investment based on Monday&S217;s share price as it pays 198 pence a share to exercise the warrants.
Barclays is set to get &<63;750 million as a result of the sale to strengthen its capital base, Qatar said.
Shares in Barclays were quoted at 363 pence in early afternoon trading in London Tuesday, down 5 percent.
&S220;The decision to exercise the warrants and dispose of the resultant shares forms part of Qatar Holding&S217;s portfolio management program and does not impact on our current intention to remain a long-term strategic shareholder in Barclays,&S221; Ahmad Al-Sayed, the investment group&S217;s chief executive, said in a statement fast cash.
The sale renewed speculation among some investors that Qatar&S217;s sovereign wealth fund could be raising cash for another acquisition.
Shares of the British supermarket chain J Sainsbury jumped as much as 20 percent last Thursday because some investors expected Qatar to make a takeover bid or try to increase its current shareholding of about 15 percent.
Shares in Sainsbury, which rebuffed a takeover proposal by Qatar in 2007, rose 4 percent Tuesday in London.
The Barclays chief executive John Varley said the effect of the share sale &S220;will be further to broaden the base of our share register.&S221;
&S220;Qatar Holdings is our largest shareholder and a key partner,&S221; he said.
Qatar initially bought a 6.2 percent stake in Barclays in July last year and increased the holding to about 7 percent, excluding warrants and share options, in October because the bank needed to raise capital to avoid taking government aid.
At that time, Barclays also sold shares and warrants to Abu Dhabi&S217;s royal family and Challenger Universal, another Qatari investment vehicle.
Qatar Takes Profit on Stake in Barclays