Sheik Mansour, a member of Abu Dhabi’s royal family, is one of the few investors to have made money from banking stocks during the credit crunch. This week his sovereign wealth fund made a surprise exit from Barclays, selling its £3.5bn investment acquired last autumn and banking a 70% profit in the process. Barclays shares fell 14% on the news.
What the commentators said
There have been “a few grumbles” from shareholders this week, said David Wighton in The Times. Last autumn the board presented Abu Dhabi as a long-term strategic partner for the bank that would improve its access to the Gulf. But now, just eight months later, it has cashed out. Still, “the moans sound like sour grapes”. Abu Dhabi was the only investor bold and rich enough to step in and shore up Barclays last autumn when it was days away from nationalisation. Institutional shareholders “were in no mood” to cough up and a rights issue would have taken too long.
Mansour had faced a “megaloss” in January when the shares hit 50p, said Nils Pratley in The Guardian. Now that they’ve gone up sixfold, only a “very brave punter” would forego the chance to take a healthy profit. But the sale may also also be a sign that “important investors” are unconvinced that the FSA’s “murky stress test” of Barclays was tough enough, said Lex in the FT. And with the recession looking far from over it’s a good time to sell out of a stock that had “overshot”.
What next?
That may go for banks in general, said Peter Thal Larson in the FT. Bad debts tend to keep rising for 12-18 months after recession ends, so they have barely begun to emerge this time round. Most large banks cost more than their book value; and Sheikh Mansour is far from the only investor cashing in on the bull run. This could mark the peak of this rally.
• BARC: 262p; 12m change -23%