Billionaire to join Barclays shareholder register
Analysts believe bank may need further £9bn in capital
A Middle Eastern billionaire and two UK hedge funds are poised to line up alongside Japanese and Qatari investors in a shake-up of the Barclays shareholder register once the bank has completed its £4.5bn (€5.6bn) capital raising plan, according to a prospectus for the deal.
However, analysts predict that Barclays may need up to a further £9bn even after the current capital raising to bring its equity tier one capital ratio in line with Royal Bank of Scotland if it suffers a similar level of credit market writedowns to its UK rival.
Barclays on Wednesday confirmed plans for the £4.5bn equity fundraising that will introduce Japanese bank Sumitomo Mitsui, the Qatar Investment Authority and Challenger, the investment vehicle of Qatar’s prime minister and his family as shareholders in the UK bank. Sumitomo’s investment is guaranteed, while the Qataris have pledged a maximum £2.3bn combined investment, subject to demand from other shareholders.
A prospectus for the fundraising obtained by Financial News revealed that other shareholders, who have already pledged to subscribe to £1.3bn, or more than 473 million shares in the deal, include long-term investors as well as those that do not currently appear on Barclays’ shareholder register.
M1 Capital International Investments, a British Virgin Islands-registered company, is to buy the biggest stake among other investors, after committing to buy up to 88.7 million shares, worth £250m at the offer price. A spokesman for Barclays declined to provide further details about the companies listed in the prospectus.
UK hedge fund manager GLG Partners has signed up for 62 million shares worth £175m, while rival manager CQS will take up to 17.7 million shares through its CQS Directional Opportunities Master Fund.
Al Habtoor Holding, a Dubai-based company thought to be a unit of the Al Habtoor Group conglomerate led by Khalaf Al Habtoor, reputedly worth $2.5bn according to this year’s Forbes billionaires list, is also participating in the fundraising after subscribing for 28.7 million shares worth more than £80m.
While Barclays’ fundraising is open to the bank’s shareholders, none of Al Habtoor, M1 Capital, GLG or CQS appear in Barclays current register, according to Bloomberg figures. A source close to the bank confirmed there will be some new investors brought in through the fundraising, adding that they could previously have held an interest in the UK bank through other financial instruments such as contracts for difference.
Citigroup analysts said today in a research note: "Despite raising £4.5bn we believe Barclays may need a further £9bn. Post the capital issuance we estimate that Barclays will have an estimated 2008 equity tier one ratio of 5.8%, the ninth worst in Europe. Simply moving the ratio into line with RBS (6.4%) would require an extra £2.5bn, with RBS-style credit writedowns increasing this figure to circa £9bn."
They added that even without the writedowns, Barclays would need to raise an extra £6.6bn to reach the same capital position as RBS based on an average comprising four key capital ratios. That figure would rise to £8.6bn to put Barclays on a par with the European banking sector average, according to the analysts.
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