Barclays risks derailing its £7bn Middle Eastern fund-raising if it tries to water down the terms of the deal to placate angry City investors. Sources in the Gulf states said yesterday that the Qatar Investment Authority and the Abu Dhabi royal family won't countenance any change to the cash call. Both the QIA and Sheikh Mansour bin Zayed Al Nahyan are said to be extremely happy with the deal as is.
However, Barclays chairman Marcus Agius and its chief executive, John Varley, are working behind the scenes to find ways to reconcile its new and old shareholders in an attempt to get the deal approved. They met with more than 20 big shareholders last week to explain the plan in which the two new investors will own around a third of the shares.
The deal has angered investors such as Legal & General, with 5 per cent, and Aviva, with 1 per cent, as it excludes them and because of the high costs. As part of the deal, the bank must also pay £300m in fees and expenses, including commissions of 4 per cent to the new investors – and £66m to the Qataris. Amanda Staveley's PCP Capital Partners, which introduced Sheikh Mansour to Barclays, will receive £40m for her advice.
A Barclays spokesman said: "We can understand why investors were so angry. In an ideal world, this is not the best deal, but in the circumstances, it was the best we could do."
He said: "It has been pointed out to investors that they were not particularly enthusiastic in taking up shares in three earlier fundraising exercises this year. Our brokers advised us that the appetite for new shares in Barclays in these markets would not be great."
Barclays claims it is still hopeful of finding a way of reconciling the differences with its investors ahead of the vote at next Monday's extraordinary general meeting.
Before the Association of British Insurers met with Barclays executives on Friday it issued an "amber top" warning on the deal but has not yet disclosed whether it advised shareholders to vote down the deal. Investors can stop the deal if more than 25 per cent vote against it. RREV, the corporate governance body, has urged investors to abstain.
Barclays has been forced to raise the new money by the Financial Services Authority to improve its capital ratios. If it cannot find the money privately, it will have to take part in the Government's bailout plan, which it wants to avoid. New investors are being offered reserve capital instruments, which earn a generous 14 per cent. The bank is raising £3.5bn from Sheikh Mansour, giving him 16.3 per cent, £2bn from Qatar's sovereign wealth fund and £300m from Challenger, an investment vehicle owned by a member of Qatar's royal family.Reuse content