Qatar Holding LLC sold the last of the Barclays Plc (BARC) warrants it acquired during the financial crisis, triggering a 740 million-pound ($1.19 billion) stock offering by the banks that arranged the transaction.
Deutsche Bank AG (DBK) and Goldman Sachs Group Inc. (GS:US) sold as many as 303.3 million shares in the British bank to money managers for 244 pence apiece, the bottom of the 244 pence to 248 pence range used to canvas investor interest in the stock, according to a term sheet obtained by Bloomberg News.
The Qatar fund will remain the biggest shareholder in the London-based bank with its 6.7 percent stake staying unchanged. Shares of Barclays have climbed 26 percent since the bank announced a plan in October 2008 to raise 7 billion pounds of capital from investors including the Abu Dhabi and Qatar sovereign wealth funds to avoid a government bailout.
“We remain a supportive strategic investor in Barclays, and maintain our confidence in the long-term prospects for the business,” Qatar Holding Chief Executive Officer Ahmad Al-Sayed said in a statement yesterday.
Barclays fell 5.4 percent to 240.5 pence in London trading, the biggest decline since June 28. That brought the gain for this year to about 37 percent.
The sale “does remove the last bit of overhang from the 2008 recapitalization,” Sandy Chen, an analyst at Cenkos Securities in London who recommends selling the shares, wrote in a note to clients today. “So the capital footings can be regarded as more stable now.”
“Barclays welcomes Qatar Holding’s message of confidence in its long-term prospects and continues to appreciate the consistent support it has received since Qatar Holding became its largest shareholder,” Barclays CEO Antony Jenkins said in the statement.
Qatar could make 170 million pounds from the deal after fees, said Ian Gordon, a London-based analyst at Investec Plc (INVP) who recommends buying shares of Barclays.
“The Qataris sold their warrants to Goldman and Deutsche and they, in turn, have hedged their position by placing 303 million shares,” he said. The warrants haven’t been exercised, and they will probably be converted into shares before October when they expire, he said. “These warrants were a sweetener to the shares.”
John Varley, CEO in 2008 and the predecessor of Robert Diamond, tapped sovereign wealth funds in the Middle East to avoid a U.K. government bailout that may have overhauled management, capped executive salaries and banned dividend payouts. Qatar made 615 million pounds by selling shares in Barclays in October 2009, a year after the bailout.
This week’s transaction comes as Barclays grapples with a criminal probe by the U.K. Serious Fraud Office into fees it paid in 2008 to Qatar’s sovereign wealth fund as part of the 2008 transactions
The U.S. Department of Justice is also investigating whether the lender made payments that violated the Foreign Corrupt Practices Act to win a banking license for its wealth- management unit and investment bank in Saudi Arabia, the Financial Times reported on Nov. 9, citing unidentified people familiar with the talks.
U.S. regulators this month also proposed levying a record $470 million in penalties on Barclays after it allegedly gamed energy markets in the Western U.S. from late 2006 to 2008.
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