The Qatari rescue investment in Barclays at the height of last autumn’s financial crisis saw the country sitting yesterday on paper profits of more than £700m.
The Qatar Investment Authority (QIA), the sovereign wealth fund, and Challenger, a vehicle backed by Qatar’s ruling family, bought £800m of convertible notes that could be changed into Barclays shares at 153 pence last October.
Under the terms of the agreement these notes converted into Barclay’s shares at the end of last month.
At Barclays’ closing share price of 292 3/4 pence yesterday, the investment is worth about £1.53bn. However, the QIA and Challenger will realise the profit only if they sell up.
At present Qatari investors have holdings and warrants equivalent to a stake of about 15 percent in the bank. QIA was one of two Middle Eastern investors that Barclays turned to last October as part of a £7.3bn capital raising through an institutional placement, which helped the bank to avoid having to take capital from the British government.
The other investor was Abu Dhabi, which pocketed almost £1.5bn in profit last month after selling a near-12 percent stake in Barclays after only eight months.
The Abu Dhabi-based International Petroleum Investment Company — headed by Sheikh Mansour bin Zayed Al Nahyan, the Manchester City Football Club owner — sold more than 1.3 billion shares.
The sheikh bought £2bn of the convertible notes, which were sold for 265 pence, netting him the huge profit. Unlike Qatar, which had lost money on a previous injection in Barclays, Abu Dhabi and Sheikh Mansour were new to the bank when asked for rescue capital during the crisis.
Shares in Barclays fell below 50 pence in January — leaving the Gulf investors’ share options substantially in the red — but have bounced back as the threat of nationalisation receded.
Last year, Barclays snubbed a government offer of cash, saying that it could raise the money it needed. It was a strategy that risked alienating shareholders, but the bank, which bought the American operation of Lehman Brothers, wanted to maintain its commercial freedom.
The QIA, which in 2007 was forced to abandon a £10.6bn bid for J Sainsbury, has had mixed returns from its UK investments.
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