Tuesday June 2, 11:44 AM
Abu Dhabi says to sell part of Barclays stake
LONDON (AFP) - Abu Dhabi's state-owned International Petroleum Investment Company said on Tuesday that it will sell a chunk of its holding in Barclays (LSE: BARC.L - news) , sparking a heavy fall in the British bank's share price.
IPIC said in a statement that it will sell the equivalent of 1.3 billion Barclays shares, which are worth about four billion pounds (4.6 billion euros, 6.5 billion dollars).
The news sent Barclays shares diving 12.41 percent to 277 pence in morning London trade as investors reacted with disappointment.
Last year, Barclays had secured a seven-billion-pound capital injection which was largely backed by oil-rich investors from Abu Dhabi and Qatar, as it sought to avoid taking British government funds like many rival banks.
"The decision to dispose of some of its interests in Barclays reflects the focus of IPIC's long-term investment strategy on hydrocarbon-related opportunities," said the IPIC's managing director Khadem Al Qubaisi.
He added: "IPIC has a high regard for Barclays, and great confidence in its management team and ongoing strategy.
"The Emirate of Abu Dhabi intends to maintain a close commercial and strategic relationship with Barclays in the future."
Barclays has spurned British government cash and instead secured extra capital from elsewhere to protect its finances from the devastating credit crunch.
"In the period since IPIC and the government of Abu Dhabi 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," added Barclays Chief Executive John Varley on Tuesday.
But the shares sale was greeted with disappointment on the London stock market, where Barclays topped the fallers board on the British capital's FTSE 100 index of leading companies.
"This tactical move brings into question any foreign investment in major companies -- in particular investment from the Middle East," said trader Manoj Ladwa at ETX Capital.
"In addition, it will make any firms looking to go on a fund raising trip to the Gulf think very carefully before booking those flights.
"It will be interesting to see how this affects the market's fragile confidence -- expect some jitters."
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