Temasek loses $850 million in ill-timed Barclays stake sale

04 June 2009

Singapore state-owned investment arm and sovereign wealth fund Temasek Holdings incurred a loss of approximately £800 million, in an ill-timed decision to offload its holdings in Barclays in the December 2008- January 2009, when the UK bank's stock value close to its lowest.

Temasek, which had started acquiring the Barclays stock since 2007, had invested over $1.7 billion for a 2-per cent stake in, but made a wrong sell bet by offloading the entire stake in the December- January last, at a time when the bank's stock value had plunged due to the global banking crisis.

The Singapore sovereign wealth fund had bought Barclays shares at 720 pence each and had agreed to buy more stock by investing another £200 million last July at 282 pence each, but as usual, it did not disclose how many shares it bought.

According to media reports, Temasek would have invested around £90 million, thereby giving it a total of 167 million shares or 2 per cent holding in Barclay's, but, in an ill-timed decision sold-off its entire 2 per cent stake in the December- January period of 2008-2009, incurring a loss of around £800 million.

In contrast Abu Dhabi-based International Petroleum Investment Company managed by Sheikh Mansour bin Zayed al-Nahyan, a member of the Abu Dhabi ruling family, made a huge profit of 70 per cent or over £3.5 billion on an investment of £2 billion in Barclay's in just seven months. (See: Abu Dhabi investor to sell Barclay's stake with windfall profits)

Sheikh Mansour had invested more than £3.5 billion in October last year in the Canary Wharf, London-based Barclay's bank, which had opted for thye Middle East investment over the UK government's condition-laden bailout offer to help crisis-affected british banks to recapitalise, after regulators demanded that it raise its capital reserves to more than £10 billion by issuing equity. (See: Barclays shuns UK bailout loan in favour of Middle East money)