LONDON,(Reuters) – Abu Dhabi on Tuesday sold about 3.5 billion pounds ($5.7 billion) of shares in UK bank Barclays, traders said, to reap a near 1.5 billion pound profit in just seven months.
By 0827 GMT Barclays shares were down 13 percent at 274p, the biggest FTSE 100 .FTSE faller. Other bank shares fell as the sale soaked up demand for stock, dealers said.
Abu Dhabi’s stake sale could raise fears that other big Barclays investors may also look to take profits. The bank raised funds from Qatar, China, Japan and Singapore investors last year.
Singapore’s state investor Temasek owns a stake, and its incoming Chief Executive Charles Goodyear may cut the fund’s large holdings in banks as he reallocates money to energy and consumer sectors, Nomura analysts said in a report.
Abu Dhabi government-owned International Petroleum Investment Company (IPIC) said late on Monday it was selling instruments that convert into Barclays shares and traders said the shares were being placed at around 267 pence each.
That sale price represents a 16 percent discount from Monday’s close of 316.25p.
Barclays and Credit Suisse, which was handling the sale, declined to comment on the placing price.
IPIC, an investment vehicle of the Abu Dhabi royal family, will have almost doubled its money since buying the mandatorily convertible notes (MCNs) in October, when Barclays raised funds privately rather than take a handout from the UK taxpayer.
The fundraising angered existing shareholders, however, who said the Middle East investors were offered attractive terms.
The MCNs can convert into about 1.3 billion shares at 153p per share before the end of this month. Barclays shares have soared more than five-fold in the last three months, after Britain’s financial regulator said its capital was adequate.
IPIC said it was also considering selling 1.25 billion pounds of another capital instrument it bought at the same time — reserve capital instruments that pay annual interest of 14 percent.