CDB stake in Barclays-ABN limited to 6.7pc as investors boost holdings

China Development Bank will see its stake in a merged Barclays Bank-ABN Amro limited to 6.7 per cent, from a maximum of 7.7 per cent, after shareholders in the British lender bought new shares in it as part of the acquisition agreement with the mainland firm.

Invited Barclays shareholders and institutional investors bought 153.8 million new shares from Barclays at GBP7.40 (HK$118.80) each, the lender said in a statement. That represents 67 per cent of the 229.7 million shares the shareholders could have purchased, as per the usual British practice of opening new share placements to parties not linked to the initial deal.

CDB's potential stake in Barclays had ranged from 6.3 per cent to 7.7 per cent, depending on how many eligible shareholders signed on for the offer.

The shareholders bought the new units at the GBP7.40 CDB would purchase the shares if the ABN deal is completed. This was at a premium to the GBP7.33 the shares were trading at in London yesterday, indicating their confidence that the merger would go through and push Barclays' shares higher. Usually, new shares are sold at a discount.

According to an agreement announced on Monday, CDB would acquire an initial 3.1 per cent tranche of new shares in Barclays at GBP7.20 each for a total price of Euro2.2 billion, and should the merger between Barclays and ABN proceed, CDB would invest up to an additional Euro7.6 billion buying more new shares at GBP7.40 each.

At the same time, Temasek Holdings of Singapore was investing up to Euro3.6 billion for an up to 2.9 per cent stake in Barclays at the same prices, Barclays said on Monday.