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Barclays' biggest shareholder, the Middle Eastern state of Qatar, today sold a large chunk of its warrants in the bank on the stock market, making more than £600 million profit.
The Qatari royal family is not selling any of its direct shareholding in Barclays where it remains the largest investor with a 7.2% stake.
Barclays shares fell 18p to 364p — close to the placing price — on the news but have soared from their low point of 51.2p seen in January of this year.
Sainsbury's shares jumped 18p to 348p on revived hopes the Qataris could be raising cash to fund a renewed takeover bid.
Today's sale was also seen by analysts as another major sign that the banking sector is recovering strongly.
Qatar and Abu Dhabi together bailed out Barclays with £7 billion at the height of the financial crisis, helping it avoid having to join Royal Bank of Scotland and Lloyds Banking Group in being part-nationalised.
Today's sell-off saw Qatar convert about half its holding of warrants into ordinary shares at an exercise price of 198p. It has asked investment bank Credit Suisse and Barclays Capital to sell those shares on the market through an accelerated bookbuilding. Barclays gains from the Qataris' sell-off, receiving £750 million of extra capital through the exercise of the warrants.
John Varley, chief executive of Barclays, said: “We are happy to be working with Qatar Holdings on a placing derived from the exercise of some 50% of its warrants.
“The effect will further broaden the base of our share register. Qatar Holdings is our largest shareholder and a key partner of the Barclays Group.”
Ahmad Al-Sayed, chief executive of Qatar Holdings, said: “The decision to exercise the warrants and dispose of the resultant shares forms part of Qatar Holdings' portfolio management programme, and does not impact on our current intention to remain a long-term strategic shareholder in Barclays.”
In June, Sheikh Mansour bin Zayed, a member of Abu Dhabi's royal family who owns Manchester City Football Club, made a £1.5 billion profit selling mandatorily convertible notes in Barclays which he had bought for £2 billion at the peak of the global credit crunch.
Analysts suggested that Qatar has moved quickly to sell part of its interest in Barclays ahead of planned rights issues from Lloyds and Royal Bank of Scotland which could be expected to tap the market for up to £15 billion and £5 billion each.
At today's share price, the Qataris are still sitting on a further potential profit in Barclays of more than £2 billion. They bought their two original stakes at 147p and 298p a share and hold a further large tranche of warrants which convert into shares at 198p.
Reader views (10)
You can't fault Barclays; they needed cash, and they got the cash, and the taxpayer wasn't robbed at all.
- Mickinlondon, london
Nosmo, if you like Barclays as a punt, but are a bit more concerned about sterling in the short term, there is no reason why you can't hedge the currency element of the risk....for a small fee of course.
- Jonathan Charles, Dublin
No, capitalism is not based on risk: it's based on greed - what kind of person would want to be an aplolgist for it?.
- Richard Kennard, Welling
Mike - Barclays simply used the market like other banks did at the time. You'd be the first to moan if they went hand out to the taxpayer. It's in the countries interest to keep at least 2 of the big three afloat as we wold be in a considerably worse mess now than we already are.
The government set the capital requirement levels and unlike RBS and HBOS, Barclays passed the both the FSA and Treasury scrutiny.
and Richard from Welling, Capitalism is based on risk.
- Hansel, London
Do they know something we dont? Perhaps they see the market as having topped - if their stake of 7 billion has trebbled to say 21 billion and they sell half ie 10.5 billion it doesnt matter if the entire remaining investment goes to pot they have still made 3.5 billion - nice work if you can get it!
- Wallytrader, London
But the Qatar investment saved Barclays from almost certain bailout by the UK taxpayer, and now they are cashing in on their investment. Perhaps next time round the taxpayer will do the same. But sooner rather than later and before the city speculators short it. The QIA is seen as an investor. The Taxpayer as a bailout machine.
- Mike, France
Nosmo King, Brighton - UK interest rates are higher than in Japan and the US.
- Paul, London
If ever you wondered if banking and finance is just a casino...
- Richard Kennard, Welling
And its a waste of time putting the money on deposit as interest rates are pathetic, this is why the pound is low.
- Nosmo King, Brighton
Simple, if the pound drops another 10% their investment is down 10%. they are getting out of the pound before they regret it.
- Nosmo King, Brighton
