Insurer to vote for Gulf cash injection to save share price
Legal & general Investment is expected to vote through the controversial Middle-East-backed £7bn refinancing of troubled high street bank Barclays, newspapers report.
L&G, which has about 5% of Barclays, is to vote in favour of the issue only because failure to secure a fresh injection of capital for Barclays would materially damage its share price and therefore the interests of L&G’s clients.
L&G had been the biggest shareholder threatening to vote against the deal that see Barclays choose funding from Qatar Holding and Sheikh Mansour Bin Zayed Al Nahyan, a member of Abu Dhabi’s royal family, rather than the cheaper alternative of UK government money. The move could leave the two Gulf investors with close to a third of the UK bank.
The FT and Guardian report Peter Chambers, L&G Investment’s chief executive, saying that in normal circumstances L&G would vote against the proposed capital raising. “However, in this case, we recognise that in these exceptional circumstances, a failure to secure this capital could lead to a material detriment in shareholder value,” he is quoted as saying. “As a result where we have discretion from our clients, we will vote in favour of the plan. In the future we will advise our clients to vote against capital raisings that disregard pre-emption rights in this manner.”
