Sheikh Mansour Chooses Hydrocarbons Over Barclays

One of the shortest chapters in Barclays’ history has closed, with the departure of one of its bacon-saving Arab investors yesterday, who collected £1.5bn in profit on their original investment. Sheikh Mansour offered his shares at a 16% discount, and sold them because they didn’t sync with his “long-term investment strategy on hydrocarbon-related opportunities”. The British banking sector is a less viable long term investment opportunity than oil and gas? That hurts.

Investors have voted with their feet at the sight of Mansour fleeing, and the share price has been dropping all morning. It’s a blow for Barclays, who were hoping that their Arab investors would stick around until June 30, when it was expected they would all take a 30% stake in the bank. It’s also embarrassing considering the anger of shareholders at being left out of a rights issue in favour of Mansour, who has now just thrown the investment back in their faces. Mansour’s investment has been a self-fulfilling prophecy – because he invested, the share price went up as it meant Barclays avoided Darling asset-insurance scheme and was therefore seen as a better bet than other banks (the selling off of assets that buoyed their capital also helped).

So Mansour has made a packet off the deal (just in time to buy Tevez and Barry?), while other winners include Amanda Staveley and Roger Jenkins, the architects of the deal in the first place – Staveley got £40m, and while its not been disclosed how much Jenkins got, suffice to say its probably a lot. Mansour still has a lucrative part of his investment still with the bank, the preference shares that pay out at a rather nice 14%.

But even with their ever-rising share price and the blessing of the FSA, Barclays wasn’t seen as a solid bet in some quarters thanks to the risky assets on its balance sheet; now that Mansour has shown a lack of confidence, the bank is starting to seem even less attractive. The board must be thinking themselves lucky that their AGM has been and gone recently.

At least it looks like it could make more than it expected from the sell-off of its ETF-trading business iShares. It had originally agreed to sell to CVC for $4.4bn – a good price considering some estimate were as low as $3m – but can still shop around for better offers, and one of $5bn has come in from Vanguard.

In a weird sort of way, Barclays’ investors have just got the rights issue they wanted in the first place. Trouble is, if Mansour doesn’t want them, who does?

Posted by Ben Beaumont-Thomas in Green Rush | June 2, 2009 11:26AM |