Kuwaitis reduce their BP shareholding with £1.2bn sale

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The Independent Online

Kuwait sold £1.2bn worth of BP shares yesterday to take advantage of a 26 per cent jump in the market value of the oil giant this year.

Goldman Sachs and Citigroup, the investment banks, sold 185 million shares at 645p on behalf of the Kuwait Investment Office, a government agency responsible for managing some of the Opec country's oil wealth. Kuwait scooped the shares from the British Government in 1987 for just 305p each at the time that the company was being privatised. The shares have soared this year after record oil prices saw BP's earnings surge.

The sale hit BP shares yesterday. They fell 11 to 640p in one of the weakest performances by any company in the FTSE 100 index.

Kuwait said it was re-balancing its portfolio, which is thought to be worth about $80bn (£45.7bn). The Gulf state still owns over 2.5 per cent of BP, the world's second-biggest oil company.

Kamel al-Harami, an independent oil analyst in Kuwait City, said: "I guess they sold the shares because they believe that the shares of BP have peaked for the time being, so this may be an opportune time to sell."

Britain parted with its remaining 31.5 per cent stake in BP in 1987 but the share issue straddled the stock market crash and was at one point in danger of being a major embarrassment to the then Conservative government.

By early the following year, Kuwait had amassed 21.6 per cent of the company. The Monopolies and Mergers Commission, the competition watchdog, stepped in to force Kuwait to trim its holding to less than 10 per cent of the company.

Earlier this week, Gordon Brown unveiled plans to take more than £2bn a year from the oil industry by doubling the "windfall" tax on North Sea profits. BP is expected to see its tax bill increase by £400m.

The company, Britain's biggest, took a £200m hit when the tax was imposed three years ago.