Abu Dhabi makes $2.5bn from Barclays stake sale

LONDON: Abu Dhabi sold an 11 per cent stake in Barclays on Tuesday, making $2.5 billion from an investment that helped the British bank through the financial crisis and raising fears that the rally in bank shares may be over.

Traders said the Abu Dhabi government-owned International Petroleum Investment Company (IPIC) was selling about 3.5 billion pounds worth of instruments that are due to convert into Barclays shares by end of June.

The sale price near 267 pence a share, according to dealers, represents a 16 per cent discount from Monday’s close of 316.25p.

Shares in Barclays fell 15 per cent to 268p by 0922 GMT to be the biggest FTSE 100 faller. Other bank shares fell too as the sale soaked up demand for stock.

The sale also raises fears that other big Barclays investors may also look to take profits, and that other sovereign wealth funds might be looking to exit the investments they have made. Barclays raised funds from Qatar, China, Japan and Singapore investors last year.

“This tactical move brings into question any foreign investment in major companies in particular investment from the Middle East,” said Manoj Ladwa, senior trader at London spread betters ETX Capital. “I would expect further falls from companies with similar exposure.”

“It’s clearly a negative signal for the banking sector,” said David Thebault, head of quantitative sales trading at Global Equities in Paris. “After stepping in at the beginning of the credit crisis to buy stakes in troubled banks, these guys (Abu Dhabi’s IPIC) are now saying: ‘the recovery rally in financial stocks is over and the shares are now ripe for profit taking’.”



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