FT.com
16 Jul 2008
nvestors in Barclays are expected to waive their right to buy new stock as part of the bank’s £4.5bn capital increase.
Shares in Barclays on Wednesday rose 6¼p to 266¾p, still well below the 282p at which new investors have agreed to buy in. Existing shareholders have until 11am Thursday to “claw back” some of the new shares, or face the prospect of seeing their holdings diluted.
Barring a significant clawback, the shares will be placed with investors led by the Qatar Investment Authority, Temasek, the Singaporean group, and a group of hedge funds and institutional investors. At Wednesday’s share price the new investors – including Sumitomo Mitsui Financial Group, the Japanese bank that is investing £500m in Barclays at 296p – are sitting on a paper loss of about £240m.
Barclays, headed by John Varley, believes that the structure of the capital increase is superior to a rights issue, because in the event of a drop in the share price, it leaves shares in the hands of long-term investors, rather than short-term underwriters.
Nonetheless, the share price slump is embarrassing for Temasek and China Development Bank, both of which bought shares in Barclays at 720p last year, and are also participating in the current offering.
Barclays was forced to deny reports that the Chinese government was planning to veto CDB’s investment. People close to the bank said CDB had already transferred its £136m investment to a JPMorgan bank account in Hong Kong.
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