* Qatar Holding sells last of warrants on Barclays shares
* Deutsche Bank, Goldman Sachs sell up 303 mln shares at
244p each
* Qatar makes big profit from controversial 2008 fundraising
* Relationship between Qatar and Barclays under criminal
probe
* Barclays shares drop 5 pct
NEW YORK/LONDON, Nov 26 (Reuters) - Qatar's sovereign wealth
fund sold the last of the warrants it owns in Barclays
on Monday, notching up a gain of more than 1.7 billion pounds
($2.7 billion) from the controversial fundraising deal it struck
with the bank four years ago.
The warrants, which convert into shares, were sold to
Deutsche Bank AG and Goldman Sachs Group Inc.
On Monday the banks sold up to 303 million Barclays shares,
worth 740 million pounds, at 244 pence apiece, a 4 percent
discount to Friday's closing share price and at the bottom of an
indicated range of 244-248 pence. By 1500 GMT Barclays shares
were down 5.1 percent at 241.3 pence, the biggest faller in the
European bank index.
Qatar Holdings will keep its 6.7 percent stake in Barclays
and make a profit of around 170 million pounds from the
"monetizing" of the warrants.
The warrants have not yet been converted, but the owners can
do so at 198 pence per share in the next year. Conversion would
bring in 750 million pounds for Barclays and lift its core Tier
1 capital ratio by about 20 basis points, but it would dilute
the holding of shares by other investors.
The warrants were part of a controversial fundraising by
Barclays at the height of the financial crisis in 2008, when it
raised billions of pounds from investors in Qatar and Abu Dhabi
to avoid taking emergency funds from the UK government.
But existing shareholders said the terms offered to the new
investors were too attractive, especially the warrants they were
given as part of the deal.
Barclays is being investigated by Britain's Serious Fraud
Office (SFO) and Financial Services Authority (FSA) for the
payments made to Qatar as part of the 2008 fundraising.
Qatar is one of the most active sovereign wealth funds with
assets of more than $100 billion and has snapped up significant
stakes ranging from miner Xstrata to German sports car
maker Porsche to oil major Shell.
PROFITABLE BET
Qatar made two big bets on Barclays in June and October 2008
which totalled about 5.3 billion pounds, including the later
payments for the conversion of warrants.
Barclays shares are near the average price Qatar paid then,
but it has profited from converting 1.5 billion pounds of
warrants - half of which it cashed a year later at a 600 million
pound profit - plus 1.5 billion pounds of capital instruments
that pay 14 percent interest until 2019 - worth about 840
million pounds so far.
Qatar was also paid commissions and fees worth 116 million
pounds alongside the October 2008 deal.
According to Reuters estimates that amounts to a profit of
about 1.7 billion pounds in total.
Qatar Holding is part of Qatar Investment Authority, which
was set up by the state in 2005 to diversify investments away
from oil and gas into new assets.
The sovereign wealth fund said on Sunday that Barclays was
still a long term strategic investment and an important
commercial partner. "We remain a supportive strategic investor
in Barclays, and maintain our confidence in the long-term
prospects for the business," its CEO Ahmad Al-Sayed said.
Barclays has had a torrid five months after being handed a
$450 million fine by U.S. and British authorities to settle
allegations that it manipulated key interest rates - prompted
the resignation of its chairman and chief executive - and is
under investigation on several other issues.
New CEO Antony Jenkins is assessing the future shape of the
bank as part of a strategic review, which is expected to see him
shrink the investment bank. Some of the bank's
biggest investors want Jenkins to take an axe to the investment
bank, the Financial Times said on Monday.
Abu Dhabi, the other big investor alongside Qatar in October
2008, sold warrants in 2010, while also keeping most of its
shares in the bank.