Barclays share placing open to new investors

Earlier this week, Barclays announced it was to raise £4.5 billion through a discounted share placing in a bid to shore up its balance sheet.

However, unlike its rivals, Barclays is not raising the funds via a rights issue and is the only major high street bank avoiding a cash call through this method.

Rather, it has launched a share issue that offers new shares to new investors as opposed to cut price shares exclusive to existing shareholders.

The open issue has been made to enable Barclays to strengthen its capital base and operate capital ratios that are ahead of its targets.

The plan is to sell shares to new investors such as the Qatar Investment Authority and Sumitomo Mitsui Banking Corporation.

The Qatar Investment Authority already has a presence in the UK, it increased its shares in supermarket giant, Sainsburys, by 7 million earlier this week and now owns more than a quarter of the company.

The Qatar Investment Authority, the state-owned investment arm of the Gulf state, is to invest £1.7 billion in Barclays, which will give it a 7.7% share in the business.

In addition, a separate Qatar company called Challenger, which is managed by Sheikh Hamad Bin Jassim Bin Jabr Al-Thani, is to invest £533 million in the business.

Meanwhile, Japan’s Sumitomo Mitsui Corporation has agreed to buy £500 million in new shares.

The amount Qatar investors will be allowed to buy will depend on the number of existing shareholders who take up their rights of 3 new shares for every existing 14 at 282p each.

Commenting on the fundraising proposals, John Varley, the group’s chief executive, said the bank is positioning itself to seize opportunities for new business at attractive margins in our retail and commercial banking businesses and in investment banking and investment management.

Shares in Barclays rose following the announcement.

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