Qatar has cashed in its remaining warrants in Britain's Barclays Plc, a move that should yield a $280 million profit and still leaves the sovereign wealth fund as the bank's top shareholder following a controversial fundraising in 2008.
Deutsche Bank AG and Goldman Sachs Group Inc said they would sell up to 303.3 million shares - worth 740 million pounds - to comply with Qatar's request. They sold shares at 244 pence apiece, a 4 percent discount to Friday's closing share price, but did not confirm whether all the shares had been sold.
Qatar Holding said in a separate statement late on Sunday it had monetized its remaining holding of 379 million units of Barclays warrants - instruments that convert into shares - without affecting its 6.65 percent stake.
The warrants have not yet been converted, but can do so at 198 pence per share in the next year, which would reap a 180 million pound profit at current prices.
Conversion would bring in 750 million pounds 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 now being investigated by Britain's Serious Fraud Office (SFO) and Financial Services Authority (FSA), which are scrutinizing payments made by Barclays to Qatar as part of the 2008 fundraising.
Qatar is one of the most active sovereign wealth funds with assets of more than $100 billion and has snapped up significant stakes ranging from miner Xstrata to German sports car maker Porsche to oil major Shell.
By 1100 GMT Barclays shares were down 4.1 percent at 243.7 pence, the biggest faller in the European bank index.
Barclays remains a long term strategic investment for Qatar Holding and an important commercial partner, the sovereign wealth fund said.
“We remain a supportive strategic investor in Barclays, and maintain our confidence in the long-term prospects for the business,” Qatar Holding CEO Ahmad Al-Sayed said in the statement.
Qatar had 814 million ordinary shares in Barclays at the end of October, making it the bank's largest single shareholder, according to Thomson Reuters data.
“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 one of the statements.
Barclays disclosed the FSA investigation when it released half-year results on July 27. It relates to fees paid to Qatar on deals in June and November 2008, when Barclays raised 11.5 billion pounds, avoiding selling shares to the British government.
The SFO is investigating “payments under certain commercial agreements” between Barclays and Qatar, the bank said on Aug. 29.
In October 2009, Qatar sold a 1.4 billion pound stake in Barclays after converting warrants it had obtained in the 2008 fundraising into shares. It sold 379.2 million shares after exercising warrants at a price of 197.775 pence.
Barclays at the time was to receive 750 million pounds from the conversion of the warrants.
The bank has recently come under scrutiny regarding manipulation of benchmark interest rate Libor and could face fines over an investigation into the manipulation of power prices the United States.
Abu Dhabi, the other big investor alongside Qatar in October 2008, sold warrants in 2010, while also keeping most of its shares in the bank. - Reuters