Oxstones Investment Club™LONDON –
Via a complicated hedging process, Abu Dhabi’s Sheikh Mansour bin Zayed Al Nahayen has effectively cashed in his emirate’s stake in Barclays.
Sheikh Mansour, a member of the Abu Dhabi royal family, will continue to control the shares through his investment vehicle PCP3, but through a complicated hedging process he has managed to sell the risk of owning them to Japanese bank Nomura and hedge Abu Dhabi against any losses on the 6.2% stake, worth about $3.8 billion.
Sheikh Mansour held the original investment in Barclays in the form of warrants, a type of security that, similarly to an option, gives its holder the right (but not the obligation) to buy an underlying security at a certain price and time.
The sheikh was one of three key “savior” investors from the Gulf in 2008 when he bought a significant holding in Barclays in order to help recapitalize the bank at the height of the global credit crisis and save it from a government handout.
The 758 million warrants bought then allowed him to purchase Barclays shares for 197.7 pence at any point before 2013. On Friday morning, Barclays shares were trading at 295 pence, down 2.8% from Thursday’s close. According to the Daily Telegraph, Mansour’s investment has led to a total profit of £750 million pounds from the warrants for Abu Dhabi, having already earned £1.5 billion last June when he sold mandatory convertible notes in Barclays.
Mansour emerged as one of the Gulf’s most exciting and powerful new investors in 2008 when he sunk approximately $5 billion of Abu Dhabi’s money into Barclays and later when he dropped another $300 million for the British soccer team Manchester City. (See “The Gulf’s Newest Billionaire.”)
In 2009 Forbes ranked him at No. 104 on its billionaires list with an estimated wealth of $4.9 billion, but he was left off the list in 2010 after it was determined that this was technically the official money of Abu Dhabi and not his personal wealth.
Tags: Banking