Shares in London housebuilder Berkeley Group tanked today after a Saudi investor dumped a slug of cheap stock on the market.

Berkeley was off 7% or 55p to 770p, having earlier slide to 716½p. It followed Saad Group's sale of 16.1 million shares at 701p through Citigroup and of another 4.4 million at 715p through Credit Suisse. Saad, the investment empire owned by Saudi billionaire Maan al-Sanea, previously held 37.7 million shares in Berkeley, nearly 29% of the company.

He was plunged into crisis last week when the central bank in Saudi Arabia froze his assets and Moody's and Standard & Poor's cut Saad's debt rating.

HSBC shares were also on the slide — down 4½p to 519p — on fears that al-Sanea will be forced to sell down his stake in the bank as well.

“Clearly Saad has got some issues it wants to resolve,” said a spokesman for Berkeley.

Saad owns shares in a number of other London-listed companies including Petra Diamonds and UK-based stem cell company ReNeuron.

The Berkeley share sale comes just weeks after the housebuilder — run by founder Tony Pidgley — raised a £50 million in a rights issue priced at 840p a share.

Unlike other property funds which have also tapped the City for cash to pay down debts, Pidgley added the money to a war chest to snap up bargains in the downturn.