Barclays in $8.8 bln share issue, Qatar a buyer

LONDON - British bank Barclays Plc unveiled an $8.8 billion discounted share issue in which Qatar Investment Authority and Sumitomo Mitsui Financial Group will be major investors. Barclays shares were 6.4 percent higher at 330.5 pence in early trading on Wednesday as investors welcomed news that the well-flagged capitAl raising exercise had been successfully completed. The stock recently fell to a 10-year low at 293p.

By (Reuters)

Published: Wed 25 Jun 2008, 3:07 PM

Last updated: Sun 5 Apr 2015, 1:13 PM

Barclays also said that, as previously announced, group profit before tax in May was well ahead of the monthly run rate for 2007, and that it intended to continue paying dividends in cash.

Barclays, Britain's third-largest bank, has lost more than $5 billion on assets hurt by the US subprime crisis and credit crunch, and said last week it planned to sell billions of pounds worth of shares to rebuild its capital base.

Some 4.0 billion pounds ($7.9 billion) will be raised through a placing and open offer of 1.407 billion new shares at 282 pence apiece, a 9.3 percent discount to Tuesday's closing price, on the basis of three new shares for every 14 held.

The 500 million pounds balance will be raised through a placing to Japanese banking group Sumitomo MitsuiBanking of 169 million new shares at 296 pence, a 4.7 percent discount.

Two new investors, Qatar Investment Authority and Challenger, have agreed to invest up to 1.764 billion pounds and 533 million pounds respectively, Barclays said. Challenger represents the interests of Sheikh Hamad Bin Jassim Bin Jabr Al Thani,the chairman of Qatar Holding and his family.

Two major existing shareholders, China Development Bank and Singapore state investor Temasek will invest 136 million pounds and 200 million pounds respectively. In addition, leading institutional shareholders and other investors will invest 1.336 billion pounds.

The prices being paid by China Development Bank and Temasek are well below the 740 pence they paid for Barclays shares last summer to help pay for the British bank's acquisition of Dutch rival ABN AMRO.

‘We confirm our participation in Barclays Plc's capital raising and we are comfortable with our level of investment,’ Temasek senior managing director Gan Chee Yen said in a statement.

Barclays said the share issue will enable it to run capital ratios ahead of its long-standing targets of 7.25 percent tier one and 5.25 percent equity tier one.

Barclays' credit crunch-related losses are far lower than many rivals but it still has one of Europe's leanest levels of capital adequacy. Its ratio of Tier 1 capital, or core capital, was 5.1 percent at the end of 2007. Raising $8 billion would lift it to near 6 percent, analysts have said.

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