Gulf investor sells out of Barclays

Sheikh Mansour bin Zayed al-Nahyan, who invested £2bn in Barclays six months ago through his International Petroleum Investment Company, announced yesterday he is to divest more than half his holding in the bank.

The holding of mandatorily convertible notes was bought at a level of 153p last year and has seen an advance to 316.25p at Monday's closing price, which would net him around a £2bn profit on the transaction, although due to the size of the deal he is likely to make rather less.

The initial purchase of the holding caused controversy at the time as shareholders accused company management of rail-roading the investment through with better terms than other investors were offered. It also makes something of a mockery of the supposed long-term relationship the bank said it wanted to foster with the Middle East at the time.

The Sheikh has enjoyed a coupon of 9.75 per cent, while Barclays shares have risen six-fold as worries over the need for government support have melted away.

John Varley, Barclays' chief executive, said: "In the period since IPIC took a position in Barclays in 2008 we have been able to broaden our strategic and commercial relationship, and we look forward to developing this further going forward."

The Sheikh's company is to retain its £1.5bn holding in Barclays securities similar to preference shares, which yield 14 per cent, and warrants for shares in in the bank that it initially bought at the same time as the convertible notes. It plans to put the money it makes on the sale into energy assets, as commodity prices recover globally.

WHAT THEY ARE SAYING
Lex, FT: "So much for Sheikh Mansour bin Zayed al-Nahyan being a long-term investor in Barclays. When the UK bank tapped Gulf investors last year, trampling on shareholders’ pre-emption rights in its haste to avoid a government bail-out, it justified the breach of corporate governance protocol by saying it would gain access to valuable “strategic and commercial relationships” in the Middle East. News that some of these Gulf investors are now looking to cash out of a large part of their holdings will embarrass the Barclays top brass and possibly ignite a new burst of shareholder irritation with John Varley and Marcus Agius, the bank’s chief executive and chairman."Song Seng Wun, economist at CIMB-GK Securities Pte in Singapore, on Bloomberg.com: "They’re reshuffling a bit, putting money into areas where, if indeed this is the beginning of the end of the great recession, there could be a recovery in demand for resources."
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