Barclays saviour Sheikh Mansour makes £2.25bn from sale of bank stake

Sheikh Mansour, a member of Abu Dhabi's ruling family who also owns Manchester City football club, has exercised his remaining 132m warrants worth £140m.

Although he officially retains ownership of the shares, which are held in his investment vehicle PCP3, he has sold almost all the risk to Nomura via a complex hedging procedure.

Nomura last night announced a placing of 220m Barclays shares worth almost £670m. Sources at the bank said key investors were already lined up to buy parts of the stake.

Sheikh Mansour was one of three Gulf investors who helped Barclays raise £7bn in 2008 at the height of the financial crisis. The cash injection, the bulk of which came from Qatari investment vehicles, helped persuade the UK Government that Barclays could survive without a state bail-out.

The sheikh held his investment in warrants, instruments that allow investors to buy ordinary shares back at a set price by a specific date. At the time, Sheikh Mansour bought 758m warrants, giving him the right to buy shares at 197.7p at any time before 2013. In February, he exercised 626m warrants when the shares were at 302p. Yesterday Barclays shares closed at 304p.

The hedging instrument set up by Normura has allowed the sheikh to lock in the value of his warrants. Under the terms of the arrangement, he could make more money if the Barclays shares rise. However, he will not lose out if they go down.

Sheikh Mansour has now effectively made a total profit of £750m from the warrants alone. He already collected £1.5bn profit last June by selling mandatory convertible notes in Barclays he bought for £2bn.

The deal will be welcomed by Barclays since exercising the warrants three years ahead of time removes the uncertainty they held over the bank.