International Petroleum Investment Corp (IPIC), an investment vehicle of the Abu Dhabi royal family, announced plans on Monday night to offload its stake in the British bank, pocketing a large profit less than seven months after making its investment.
The decision by such a high-profile investor to offload its stake after such a short period may undermine confidence in Barclays, which has benefited from renewed shareholder support after the Financial Services Authority concluded the it did not need to turn to the government to raise additional capital.
The sale of the notes and the shares will startle UK shareholders who were told last autumn 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.
Large institutional investors were furious that Barclays turned to Middle Eastern investors for new capital on lucrative terms without giving existing shareholders the opportunity to participate. Barclays executives defended the deal by arguing that it allowed the bank to remain independent of the UK government.
John Varley, chief executive of Barclays, made a meaningless statement on Tuesday, saying: ?In the period since IPIC and the government of Abu Dhabi took a position in Barclays in 2008 through their purchase of mandatorily convertible notes and reserve capital instruments we have been able to broaden our strategic and commercial relationship, and we look forward to developing this further going forward.?
