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Tuesday, 2 June 2009

Well that was quick

Several moons ago, the directors of Barclays figured they were a bit short of capital, and faced with the prospect of nationalisation they went cap in hand to the Gulf, seeking Arab money, which they duly found, much to the consternation of several socialist politicians who wanted to give the bankers a clip round the ear, for no better reason than the fact they were bankers, but let's leave that aside.

Also peeved were one or two larger institutional shareholders, who thought that having ridden the Barclays share price all the way down (which is what you do if you are running atracker fund), they should have been allowed some of the upside from a discounted equity issue. The Barclays directors unveiled International Petroleum Investment Corp, an investment vehicle of the Abu Dhabi royal family as its new investor, adding that IPIC chairman Sheikh Mansour bin Zayed al-Nahyan, a member of Abu Dhabi’s royal family and owner of Manchester City football club, was a long-term strategic investor in the bank.

It seems that seven months is long term these days, because IPIC aanounced plans on Monday night to offload its stake, pocketing a large profit on its £3.5bn investment. The group also invited offers for its £1.5bn holding of Barclays capital notes in a sale to be completed by tomorrow.

The share price of Barclays has surged since the Financial Services Authority concluded the it did not need to turn to the government to raise additional capital. No doubt the Arabs decided that the FSA were no more likely to be correct now than they ever have been, so they got out while the going was good.

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