Barclays look to Qatar for funds
June 25, 2008
Barclays have received £2bn as the Gulf state of Qatar invests in the bank. Barclays have been trying to raise capital to help balance out their cash flow.
The Qatar Investment Authority will invest a possible amount of £1.76bn and a company called Challenger, who represents the ruling family in Qatar, will put in a further £533m.
Barclays are offering 1.5 million shares that looks set to give the bank £4.5Japanese company Sumitomo Mitsui is adding £500m.
Existing shares in Barclays reacted positively when the news of the rights issue was released. The placement of new shares is at a much smaller discount than the greatly discounted rights issues done by RBS and HBOS.
An analyst at Fox-Pitt Kelton Ltd, Leigh Goodwin said “It’s probably a better way to raise money than some of the other rights issue.”
The move also shows a shift in financial power.
Funds from sovereign sources have been used to invest in Citigroup, Merrill Lynch, Morgan Stanley and UBS since the credit crisis began to take hold a year ago.
Qatar could end up with as much as 10% of Barclays, although this could only realistically if existing shareholders chose not to take up the new shares.
Under the capital rising terms through a placing Barclays is issuing 1.4bn of the shares and open offer at 282p a share which is a 9.3% discount to yesterday closing share price of 310¾p. The rest of the shares will be issued through a firm placing at 296p each, a 4.7% discount.
See www.barclays.com for more information on the bank.
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