Tuesday June 2, 05:44 PM
Barclays shares slide as Abu Dhabi dumps stake
By Roland Jackson
LONDON (AFP) - Shares in British bank Barclays (LSE: BARC.L - news) tumbled 13.5 percent on Tuesday after Abu Dhabi's state-owned International Petroleum Investment Company sold a chunk of its holding for a sizeable profit.
The shares were sold at 265 pence each for a total of 3.5 billion pounds (5.8 billion dollars, 4.1 billion euros), according to Credit Suisse Securities, handing IPIC a gain of 1.5 billion pounds in just seven months.
IPIC had in a statement said it was selling 1.3 billion shares or 13.5 percent of Barclays.
In reaction, the bank's share price slumped by as much as 15 percent in early trade and eventually closed down 13.5 percent at 273.5 pence.
The FTSE 100 index, on which the bank is listed, fell 0.65 percent to end at 4,477.02 points.
"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."
The sale leaves IPIC with 5.0 percent of Barclays stock.
Last year, Barclays secured a seven-billion-pound capital injection that was largely backed by oil-rich investors from Abu Dhabi and Qatar, as it sought to avoid taking British government funds in a bid to survive the credit crunch.
Abu Dhabi's shock move to sell came after Barclays shares had surged by around 50 percent in value since last October.
"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 chief executive John Varley said on Tuesday: "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."
-- Dow Jones Newswires contributed to this story --
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