Qatar’s sovereign wealth fund has sold more than one-third of its stake in Barclays for £510m, marking its biggest sale of shares in the UK bank since piling in to help it avert a state rescue in 2008.
Qatar Holding sold 361.7m shares in Barclays in an accelerated bookbuild on Monday at 141p per share, a slim 1.4% discount to the 142.98p close. Bank of America and Citigroup were joint bookrunners on the offering. There was no covered message. The shares were down 2.4% on Tuesday at 139.56p after 4pm in London.
Qatar opted to run an auction of the stock among several banks, with BofA and Citi winning the trade and launching into the market at 5:10pm in London with guidance of 141p to the 142.98p close. A head of ECM not involved in the deal said there had been a rumour in recent weeks that Qatar might trim its stake.
Other senior bankers commented on the decision to conduct an auction, where the seller is a strategic shareholder of many years and retains a significant shareholding; the alternative is to select banks working on a best-efforts basis, potentially including a wall-crossing exercise ahead of launch if necessary. Another head of ECM contrasted Qatar's approach with that of Singapore's GIC, which sold its crisis-era investment in UBS through the Swiss bank.
This is the third auctioned block completed by Qatar Holding this year, having sold a portion of French construction group Vinci in February and hospitality group Accor in May. Both of those were won by BofA on a sole basis.
A banker on the Barclays deal said there was demand from shareholders and new investors, with a mixture of long-only and hedge funds involved.
Two bankers involved confirmed they had been left with some stock, however they did not see this as cause for concern.
"We off-loaded a good chunk [of stock]," said the first banker. "It’s a big liquid stock and the banks were comfortable with the amount. It’s a perfectly manageable amount."
The placing represents about three days' trading volume so the leads could easily trade out of their residual position.
There was also confusion about the size of the stake held by Qatar, perhaps due to two different entities being involved. Qatar Holding is owned by Qatar Investment Authority. Barclays said QIA owned 847.6m shares before the sale, giving it a 5.6% stake, after reducing the holding from 1bn shares in January 2022. As a result, Monday's sale represented 43% of the holding and left QIA with 486m shares, equivalent to a 3.2% stake.
Barclays said in its last annual report, however, that Qatar Holding owned 1.017bn shares at the end of 2022 and indicated it had not sold any shares for years. The discrepancy could be explained by the SEC having stricter disclosure requirements than the UK Financial Conduct Authority’s disclosure and transparency rules.
Qatar Holding has pledged not to sell any more shares for 60 days although the sale is unlikely to reassure markets.
"They’re a strategic shareholder selling half their position," said a banker away from the deal. "There’s a reputational question to be asked here."
"You have to think QIA has decided to move on,"said a second banker on the deal.
The first banker on the deal was more sanguine, arguing the sale was more around monetisation and tidying up, and unlikely to have a major impact on the stock.
"It would be different if it was someone on the board but this is a long-term investor with a single-digit holding," he said.
Barclays shares are down 12% this year and the bank is under pressure to improve returns and lift its share price. CEO CS Venkatakrishnan is expected in February to detail strategic changes, which are expected to include cutting costs by up to £1bn, diverting some assets from the investment bank and a pledge to buy back more shares.
The Qatar entities invested about £4bn in Barclays in two cashcalls in 2008, but the investment has been dogged by controversy from the start. Barclays raised more than £11bn from investors in Qatar, Abu Dhabi and elsewhere at the height of the financial crisis, which allowed it to avert a state bailout, unlike Royal Bank of Scotland and Lloyds Banking Group, which had to be rescued with taxpayer cash.
But British prosecutors subsequently charged three former Barclays executives with fraud related to the Qatari fundraising, claiming they arranged for secret fees to be paid. After years of legal wrangling and a four-month London High Court case, the three men were acquitted in early 2020.
Last year the UK’s Financial Conduct Authority fined Barclays £50m for failing to disclose certain arrangements agreed with Qatari entities as part of the 2008 fundraisings. The FCA said Barclays’ conduct in the October 2008 capital raising was “reckless and lacked integrity”.
Qatar was not accused of any wrongdoing, but its bet on Barclays has soured as the bank’s share price has fallen. Qatari entities bought shares at an average price of 218p and Monday’s sale was at 35% below that price. Its loss from the fall in share price will have been cushioned by other instruments bought in the complex October 2008 fundraising, however, which included reserve capital instruments, warrants and advisory fees.
IFR previously calculated that Qatar investors are likely to have made about £2.7bn from those other investments: The RCIs paid 14% annual interest for more than 10 years; it made a £770m profit from monetising the value of its warrants in the first three years; and it was paid £86m in commission and fees on the deal.
Refiled story: Adds detail on placing