Barclays looks to overseas investors for £4bn

by Gill Montia

Story link: Barclays looks to overseas investors for £4bn

Barclays has confirmed that it will be raising new capital from foreign investors. The bank is reported to be seeking up to £4 billion from sovereign funds.

The decision will no doubt have been influenced by the experiences of Bradford & Bingley (B&B), Royal Bank of Scotland and HBOS.

The rights issues of all three banks have been the subject of dramatic headlines and in the case of B&B and HBOS, plummeting share prices.

The fundraising method pursued by Barclays should ensure that existing investors do not see the value of their stock decline as the new shares will be offered at above Friday’s closing price of 318p.

China Development Bank and Temasek (an investment vehicle owned by the government of Singapore) are likely to be approached early in the proceedings as both are existing shareholders.

Barclays says that it is raising capital for business development, rather than to bolster its balance sheet.

The bank has ambitious expansion plans in Asia, the Middle East, Russia and Africa and is also pursuing growth opportunities in the US.

Bob Diamond, head of its investment banking division recently announced that he would be splitting his time equally between London and New York.