Abu Dhabi has raised its stake in Barclays Plc to 5.2 percent by paying $1.9 billion (1.2 billion pounds) to exercise warrants it took as part of a controversial fundraising by the UK bank two years ago.
Wednesday's purchase by the emirate increases Barclays' core Tier 1 capital to 10.4 percent from 10 percent.
Barclays said Abu Dhabi had exercised 626.8 million of its warrants at the agreed price of 197.75 pence per share. It still holds 131.6 million warrants, which could lift its shareholding by a further 1.1 percent.
Warrants allow a holder to buy a stock at a specific price, usually during a specified period.
Abu Dhabi committed to pump up to $7.50 billion into Barclays two years ago to boost its capital and help it avoid taking cash from the UK government.
Abu Dhabi sold instruments equivalent to an 11 percent stake in the bank last June, making $2.5 billion from the investment.
Barclays raised funds from Qatar, China, Japan and Singapore investors in 2008, angering existing shareholders, who said the Middle East investors were offered more attractive terms than they could get.
Qatar holds 379.2 million warrants that can be exchanged into shares under the same terms as Abu Dhabi. The warrants are exercisable until 2013.
Barclays shares rose 2.9 percent on Wednesday to close at 302.3 pence, extending a two day rally after it reported strong 2009 earnings on Tuesday.
Abu Dhabi's investment was originally made through IPIC, a vehicle of its royal family, but it has since been moved into another vehicle, PCP3.
In a statement, Ali Jassim, representing PCP3, said: "We continue to have a high regard for Barclays and we will seek to continue to maintain a close commercial and strategic relationship with Barclays in the future." (Reuters)For all the latest banking and finance news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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