* IPIC set to reap 1.5 bln pound profit in seven months
* Fears raised of further sovereign wealth fund sales
* Shares sold at 265p each - bookrunner
* Sold at 16 pct discount to Monday's close
* Barclays shares down 15 pct, other banks fall
(Adds confirmation of placing price, details)
By Dominic Lau and Steve Slater
LONDON, June 2 Abu Dhabi sold more than 11
percent of Barclays (BARC.L), making $2.5 billion from an
investment that helped the British bank through the financial
crisis and raising fears more may cash in on a recent rally in
The Abu Dhabi government-owned International Petroleum
Investment Company (IPIC) on Tuesday sold about 3.5 billion
pounds worth of instruments that are due to convert into
Barclays shares by the end of June.
The shares were sold at 265 pence a share, said Credit
Suisse CSGN.VX, which handled the sale. The placing was at a
16 percent discount from Monday's close of 316.25p.
Shares in Barclays fell 13 percent to 274.5p by 1120 GMT,
the biggest FTSE 100 .FTSE faller. Other bank shares fell as
the sale soaked up demand for stock.
The sale also stoked fears that other big Barclays investors
may also look to take profits, and that other sovereign wealth
funds might be looking to exit the investments they have made.
Barclays raised funds from Qatar, China, Japan and Singapore
investors last year. [ID:nL21007909]
"This tactical move brings into question any foreign
investment in major companies -- in particular investment from
the Middle East," said Manoj Ladwa, senior trader at London
spread betters ETX Capital. "I would expect further falls from
companies with similar exposure."
"It's clearly a negative signal for the banking sector,"
said David Thebault, head of quantitative sales trading at
Global Equities in Paris. "After stepping in at the beginning of
the credit crisis to buy stakes in troubled banks, these guys
(Abu Dhabi) are now saying: 'the recovery rally in financial
stocks is over and the shares are now ripe for profit taking'."
FUNDRAISING AT KEY TIME
Singapore's state investor Temasek owns just under 2 percent
of Barclays and its incoming chief executive may cut its holding
in banks as he reallocates money to energy and consumer sectors,
Nomura analysts said earlier on Tuesday. [ID:nSIN472073]
IPIC, an investment vehicle of the Abu Dhabi royal family,
will have almost doubled its money since buying the mandatorily
convertible notes (MCNs) in October, when Barclays raised funds
privately rather than take a handout from the UK taxpayer.
The fundraising angered existing shareholders at the time.
They said the Middle East investors were offered more attractive
terms than they could get.
The MCNs are due to convert into about 1.3 billion shares at
153p per share before the end of this month. Including the
conversion of other MCNs sold last year but excluding warrants
held by Abu Dhabi and others, the stake sold represents just
over 11 percent of the British bank.
Barclays shares have soared more than five-fold in the last
three months, after Britain's financial regulator said its
capital was adequate.
IPIC said it was also considering selling 1.25 billion
pounds of another capital instrument it bought at the same time
-- reserve capital instruments that pay annual interest of 14
percent -- but had no plans to sell its warrants.
Abu Dhabi invested up to 4.75 billion pounds in Barclays,
including 1.5 billion pounds on warrants exercisable at 197p.
Its stake will fall to about 5-6 percent with just the exercised
warrants, from potentially just over 16 percent.
IPIC, which in March bought a 9 percent stake in German auto
maker Daimler (DAIGn.DE), said it had a "high regard" for
Barclays and its management and strategy, but it was focusing
its strategy on hydrocarbon-related investments.
Sheikh Mansour bin Zayed Al Nahyan, a member of the Abu
Dhabi royal who is chairman of IPIC and oversaw the investment,
has an estimated $4.9 billion fortune and earlier this year
bought English soccer club Manchester City.
(Additional reporting by James Davey, Victoria Howley and Simon
Falush in London and Blaise Robinson in Paris; Editing by Erica
Billingham and Andrew Callus)