Tuesday June 2, 12:12 PM
Barclays shares slump 15% as Abu Dhabi dumps stake
By Roland Jackson
LONDON (AFP) - Shares in Barclays (LSE: BARC.L - news) tumbled by nearly 15 percent on Tuesday after Abu Dhabi's state-owned International Petroleum Investment Company said it would sell part of its holding.
IPIC said in a statement that it would sell the equivalent of 1.3 billion shares worth four billion pounds or up to 13.5 percent of Barclays.
In reaction, the bank's share price slumped by 14.47 percent to 270.50 pence in late morning trade. The FTSE 100 index was down 0.73 percent.
The sale, which is being handled by Credit Suisse and began on Tuesday, will leave 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 government funds like many rival banks.
Abu Dhabi's shock move comes after Barclays shares had surged by around 50 percent in value since last October. IPIC did not reveal the price of its share sale on Tuesday but the state-backed firm will reap a considerable profit.
"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 government cash and instead secured extra capital from elsewhere to protect its finances from the devastating credit crunch.
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."
The share sale was greeted with disappointment on the stock market, where Barclays topped the fallers board on the 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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