Some of Barclays' biggest shareholders have threatened to vote against its planned 7 billion pound ($10.8 billion) fundraising unless it improves the terms of the deal, newspapers reported on Wednesday. The Financial Times said Legal & General Investment Management and Aviva Investors had raised the prospect of voting against the plan at Barclays' shareholder meeting on November 24.
LGIM and Aviva declined to comment. One top-10 investor in the bank, who asked not to be named, said shareholders had concerns about the scale of dilution, the costs and the absence of pre-emption rights under Barclays' fundraising plans. But he declined to say if he would vote against it. Barclays executives are on a roadshow talking to investors about the capital raising.
Other major investors told Reuters they had concerns about the plan but the issues may be a price worth paying for Barclays to avoid a state shareholder and keep its commercial freedom. "The conversations are constructive and ongoing," a spokesman for Barclays said. He declined to comment on whether there was scope to adjust any of the terms of the fundraising.
The bank is expected to meet the Association of British Insurers on Friday to discuss the issue. The ABI, which represents a fifth of all UK investors, said it was up to individual shareholders to decide whether to support the plan. Barclays has opted to raise funds privately rather than rebuild capital with government funds after banks were told last month they need higher capital levels.
It will raise the cash mainly through the sale of complex capital instruments to investors in Abu Dhabi and Qatar, but will pay slightly more interest, probably over a longer period, than if it had taken taxpayer funds. Barclays said a fully pre-emptive offer to all shareholders in current difficult markets would have been too risky.
If the capital raising plan goes ahead in its current form almost a third of the bank will be owned by Middle East investors. Barclays shares were up 1.2 percent at 181.1 pence by 1240 GMT, outperforming a slightly weaker European bank index.