Qatar may make $1 billion selling Barclays shares after bailout

Qatar will make about 633 million pounds ($1 billion) as it sells shares in Barclays Plc a year after it helped bailout Britain's second-biggest bank.

Qatar Holding LLC, the Doha-based arm of the Qatar Investment Authority, plans to exercise warrants to sell more than 379 million Barclays shares, the companies said today in a statement. Barclays fell as much as 5.5 percent.

Barclays raised more than 5 billion pounds from Middle Eastern investors last year, triggering criticism from shareholders including Legal & General Group Plc who weren't first given an opportunity to buy new stock. Barclays has surged since touching a March low, as it avoided government aid unlike Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc.

"It seems logical for the Qataris, having committed capital in the hour of need, to now take some money off the table," said Michael Crawford, a fund manager at London-based LV Asset Management Ltd., which has about 7 billion pounds in assets, including Barclays stock. "It may take a few weeks for the market to absorb the extra stock; in any longer time period I don’t think it has any impact on the share price."

Barclays will receive about 750 million pounds from the transaction as Qatar pays 197.775 pence a share to exercise the warrants, the companies said.

Qatar Holding is Barclays's biggest shareholder. It retains a stake of more than 7 percent, plus about 379 million additional warrants, according to regulatory filings. The company sold 35 million Barclays shares in April.

"The decision to exercise the warrants and dispose of the resultant shares forms part of Qatar Holding’s portfolio management program and does not impact on our current intention to remain a long-term strategic shareholder in Barclays," Chief Executive Officer Ahmad Al-Sayed said in the statement.

Barclays fell 4.6 percent to 364.6 pence as of 11:10 a.m. in London trading, after dropping to a low of 361 pence. The stock has quadrupled in the past eight months.

Qatar, the largest investor in J Sainsbury Plc, may use proceeds from the sale to increase it holding in the U.K.'s third-biggest grocery chain, said Simon Maughan, an analyst at MF Global Securities Ltd. in London.

"The thinking has to be that Qatar will keep its stake in Barclays where it is and place the remaining warrants into the market," Maughan said. "This is to prepare the war chest for Sainsbury."

Barclays turned to Qatar Holding and Abu Dhabi's royal family for funding last October rather than accept a U.K. government bailout after the collapse of Lehman Brothers Holdings Inc. Qatar also invested in Barclays in June 2008 as the bank sought to bolster capital and expand abroad.

Abu Dhabi investors made 1.46 billion pounds when they sold more than 1.3 billion Barclays shares in June this year. Abu Dhabi still holds warrants exercisable for more than 758 million Barclays shares at 197.775 pence.

Source: Bloomberg
Date: 21.10.2009 [236]