Qatar fund nets $2.7bn from Barclays deal
London, November 27, 2012
Qatar's sovereign wealth fund has sold the last of the warrants it owns in Barclays, notching up a gain of more than £1.7 billion ($2.7 billion) from the fundraising deal it struck with the bank four years ago.
The warrants, which convert into shares, were sold to Deutsche Bank AG and Goldman Sachs Group.
The banks sold up to 303 million Barclays shares, worth £740 million, at 244 pence apiece, a four per cent discount to Friday's closing share price and at the bottom of an indicated range of 244-248 pence.
Qatar Holdings will keep its 6.7 per cent stake in Barclays and make a profit of around £170 million from the "monetising" of the warrants.
The warrants have not yet been converted, but the owners can do so at 198 pence per share in the next year. Conversion would bring in £750 million for Barclays and lift its core Tier 1 capital ratio by about 20 basis points, but it would dilute the holding of shares by other investors.
The warrants were part of a controversial fundraising by Barclays at the height of the financial crisis in 2008, when it raised billions of pounds from investors in Qatar and Abu Dhabi to avoid taking emergency funds from the UK government.
But existing shareholders said the terms offered to the new investors were too attractive, especially the warrants they were given as part of the deal.
Barclays is being investigated by Britain's Serious Fraud Office and Financial Services Authority for the payments made to Qatar as part of the 2008 fundraising.
Qatar is one of the most active sovereign wealth funds with assets of more than $100 bilion and has snapped up significant stakes ranging from miner Xstrata to German sports carmaker Porsche to oil major Shell.
Qatar made two big bets on Barclays in June and October 2008 which totalled about £5.3 billion, including the later payments for the conversion of warrants.-Reuters