Revealed: The truth about Barclays and the Abu Dhabi investment

By:
Clive Horwood, Eric Ellis
Published on:

Amanda Staveley earned an astonishing £30 million fee for her role in helping to secure Abu Dhabi’s £3.5 billion investment in Barclays in 2008, a deal on which Sheikh Mansour made a profit of more than £3 billion. Euromoney reveals the extraordinary tale behind that trade, the battle for £110 million in fees paid by Barclays to Mansour, and just how close-run a deal which saved the bank from part-nationalization was – which is currently the subject of an investigation by the Serious Fraud Office.

Lunchtime on April 30 2009, and Amanda Staveley’s private banker on the Isle of Man has just emailed her with confirmation that a sum of £29.5 million ($45.7 million) has been deposited into her account.

The note from Douglas might have provided a bitter-sweet moment for the Dubai-based Staveley, the Yorkshire-born dealmaker building a reputation gladhanding high-octane deals in the Gulf, after a hectic few months helping arrange one of the defining transactions of the 2008 global financial crisis: Abu Dhabi’s £3.5 billion investment in Barclays Bank six months earlier.

Sweet because she had finally received a commission for the Barclays deal that she’d been sweating on Gulf potentates paying for a long time.

But bitter because the amount received was some way short of what she’d initially hoped to garner for her role in the Barclays rescue, a deal dubbed 'Project Mandolin'.

The disclosure of the fees paid to Staveley and her firm PCP Capital Partners – revealed in a dossier of documents relating to the transaction and seen by Euromoney – will also stir mixed emotions among Barclays shareholders.

At the time of the capital raising, many were up in arms at the highly generous terms offered not just to Sheikh Mansour bin Zayed Al Nahyan, the Abu Dhabi royal and UAE deputy prime minister, whose participation Staveley had helped arrange, but also to Qatar Holdings, one of neighbouring Qatar’s sovereign wealth funds.

Euromoney’s disclosures cast the first light on what happened to the £110 million in fees paid by Barclays – and its shareholders – nominally to Sheikh Mansour, but in reality to a cast of advisers, associates and family members, of which Staveley was a big beneficiary.

The documents seen by Euromoney – a collection of business exchanges, and emails written or sent by Staveley, her colleagues and her contacts from 2008 to 2009 – also show how public disclosures about the Mansour investment masked the realities of how close run the deal was, and how complex – and arguably misleading – the nature of the capital injection from Abu Dhabi was.

They provide a fascinating insight into how the west meets the Middle East when it comes to doing business for eye-watering sums of money, as well as how frantic attempts to secure the money for the Barclays investment were, pulling in a range of some of the biggest names in the financial markets, from the US to China.

The entire round of capital raisings by Barclays in 2008 – first a £4.5 billion injection in June by existing shareholders, principal among them the Qatar Investment Authority and Challenger, an entity representing Qatari prime minister Sheikh Hamad bin Jassim bin Jabr Al-Thani, followed by the £7.3 billion injection by Mansour and the Qataris in November – have been shrouded in rumour, mystery, intrigue and speculation.

They are also the subject of investigation. Barclays has disclosed that the UK’s Financial Services Authority and Serious Fraud Office are looking into commercial agreements between Barclays and Qatari interests and if these were related to the two Barclays capital raisings in 2008.

There is also an investigation by the US Department of Justice and the US SEC into whether or not Barclays' relationships with third parties that assist Barclays to win or retain business are compliant with the US Foreign Corrupt Practices Act.

Both investigations are cited in the independent review of Barclays written by Anthony Salz, a vice-chairman of Rothschild, published at the beginning of April this year.

The Barclays transaction was Amanda Staveley’s ticket to a £30 million fee and a place among the Middle East’s elite


In the review, Salz says that Barclays disclosed that “commissions, fees and expenses for the October/November capital raising amounted to £300 million, payable primarily to Qatar Holding, Challenger and HH Sheikh Mansour bin Zayed Al Nahyan... In view of the continuing investigations into these capital raisings, we have not considered issues concerning the sufficiency of disclosure or the commercial arrangements.”

Barclays has already, and embarrassingly, been pulled up for the poor quality of its disclosure. When shareholders were given the chance to vote on the capital raising on November 24, they were told unequivocally that the investment was being made personally by Abu Dhabi’s Sheikh Mansour himself. The following day, the small print of regulatory disclosures showed that the £3 billion injection was actually in the name of the International Petroleum Company (Ipic) of which Mansour is chairman. The 2008 annual report, published in 2009, continued to refer to Mansour as the owner of the stake.

Barclays says that it made amendments as soon as it was made aware of them, and that the annual report was a drafting error. But the bank was left with egg on its face when these errors were disclosed in a BBC Panorama documentary about Barclays in March this year.

In fact, the documents seen by Euromoney reveal that the nature of Mansour’s investment was much more complicated than the drafting error revealed, involving a series of shelf companies called PCP Gulf Invest 1, 2 and 3 first set up in Staveley’s name and that of her partner at PCP, Craig Eadie, that were then transferred into Abu Dhabi’s beneficial ownership. But not in Mansour’s name. The transfer was into the private company of his close colleague, Khadem Al-Qubaisi, the managing director of Ipic and one of the most prominent businessmen in the Gulf.

A filing posted to the UK authorities on July 8 2009 states in relation to a notification regarding a block of Barclays shares: “The option has been granted to KAQ, which is wholly owned by HE Khadem Al Qubaisi. The option is to acquire, at any time, the entire share capital (and not a portion only) of Kadin Holdings Ltd. (‘Kadin’). Kadin wholly owns PCP Gulf Invest 3 Limited, which, in turn, owns warrants exercisable into 758,437,618 ordinary shares in Barclays PLC at an exercise price of 197.775p. The expiration date of the warrants is 31 October 2013.”

Staveley also claimed that she had arranged protection for Mansour against a further deterioration in Barclays’ position, and the potential for further capital raisings in that event – in effect, a well-paid free bet.

A letter to Mansour from PCP, dated January 21 2009 and seemingly sent by Staveley, reveals: “When I negotiated the terms for your investment in Barclays last October, I anticipated that there might be instability in the price of the shares of Barclays and the other banks during the next few months, before the markets finally stabilised. I therefore required Barclays to give you a seven-month protection period for your £2 billion of ordinary shares, ending on 30 June 2009. During this period, any further issue of shares by Barclays, whether in the market or to the UK Government, at a lower price than the price we agreed last October for your shares (153p), will reduce the price you pay for each of those ordinary shares to that lower figure and thus increase the number of shares you receive for your original investment.

An aide to former Thai prime minister Thaksin Shinawatra (pictured here with Mansour adviser Khaldoon Al Mubarak) was among third parties sent details of the Mansour investment before its announcement


“The result is that if Barclays does have to issue new shares at a price which is (for example) half our agreed price, then you will automatically get twice as many ordinary shares for the money you have already invested. Your ordinary shares are thus fully protected against any issue of shares at a lower price during this time, down to a minimum price of 25p.

“If this provision comes into effect, you could end up owning significantly more of Barclays Bank at no extra cost. The current UK market conditions for bank shares may therefore represent an important opportunity for you.”

That wasn’t all. As Barclays was looking to secure the investment from Mansour, which it had publicly announced, Staveley and PCP were hawking the investment opportunity around to a number of other high-profile, potential investors. These were the head of the world’s biggest fund manager; the Chinese sovereign wealth fund; and the adviser to one of Thailand’s wealthiest individuals.

More worrying still for Barclays shareholders was what happened to the £110 million ostensibly paid to Mansour as a fee for his participation in the deal.

There is no question that the sum and calculation of this commission was properly disclosed by Barclays. In its regulatory filing at the time, Barclays said that the three principal investors – Qatar Holding, Challenger and Mansour – would each receive a 4% commission of the principal amount of the £2.8 billion of mandatory convertible notes (MCNs) for which they had respectively subscribed. Mansour’s share of this pot was £80 million.

Additionally, both Qatar Holding and Mansour would receive a commission of 2% of the principal amount of the reserve capital instruments (RCIs) to which they had subscribed. Mansour’s share of this tranche was worth £30 million. The commissions would be payable even if the proposed resolutions were not passed by other shareholders at the general meeting.

Contrast these sums with the figures received by the lead managers on the deal. Credit Suisse and JPMorgan Cazenove received a fee worth 0.75% of the MCNs, around £11.3 million. Their fees for the RCIs were just £900,000 each.

At the time, shareholders questioned if the fees paid were appropriate, especially in light of the eye-popping interest rates that the three main investors would receive on the deal. The MCNs paid a coupon of 9.75%. And the RCIs paid 14%. At such levels, why did these already super-rich investors need further remuneration?

The answer, in the case of the Mansour investment at least, was that he didn’t. Staveley was just one of a number of advisers to benefit, but at no point was it disclosed by Barclays that the fees it paid to Mansour would be passed to third parties.

And these fees directly hit Barclays' shareholders. The £110 million was withheld by the Mansour parties from the capital injection, meaning that the sum raised by Barclays was actually well short of the £3.5 billion the bank said it raised from Abu Dhabi.

Shareholders might also consider exactly what Staveley did to deserve her almost £30 million bonanza, compared with the far smaller payouts received by the lead managers. Or they might compare it with the £1.1 million Barclays chief executive John Varley took home in 2008, having waived his bonus.

And all of this should be taken in the context of the huge sums that Mansour and Ipic are said to have made from the transaction. Of course, Mansour should receive credit for making a savvy investment in Barclays at the bank’s lowest ebb. Barclays made it through the crisis without direct government support; its purchase of Lehman Brothers in the US was inspired; it returned to profitability; and its share price soared from its distressed lows.

By June 2009, the Barclays share price had soared and it was time for Mansour to sell his MCNs. These converted into Barclays stock at £1.53; at the time, they were trading at over £3.

In February 2010, Mansour reportedly exercised 626 million of his 758 million warrants at a purchase price of 197.7p when the share price was £3.02. He is understood to have exercised the final warrants in October that year.

Industry estimates suggest Mansour made around a £1.5 billion profit on the sale of the MCNs and at least £750 million on the RCIs.

But even these returns do not match the numbers that Staveley later claimed in an undated presentation showing the credentials of PCP Capital Partners. This document boasts: “On June 2nd 2009, Sheikh Mansour sold a large majority of his holding and generated a profit of c.GBP3.1bn, prompting the press to qualify his investment in Barclays as one of the ‘best structured and negotiated deals of the last decade’.”

A handsome reward, and one for which it is traditional in the financial industry to reward your advisers. Staveley clearly made a great deal for her client, Sheikh Mansour.

But the question remains: why were she and others effectively paid for that advice by Barclays, and not by Mansour?

When contacted by Euromoney, a Barclays spokesman said: “In light of the ongoing investigations surrounding certain aspects of the 2008 capital raisings, Barclays is not able to comment on these matters at the moment.”

Amanda Staveley and PCP Capital Partners were given several opportunities to respond to the facts in this story before publication, but failed to do so.

For the then 35-year-old Staveley, the April 30 funds might have afforded her a moment of rueful reflection on what might have been if she had conducted things differently during the turbulent six months since the Barclays deal.

Since arriving in the UAE in the mid-2000s, Staveley had handled a few deals while building a contact base, notably among the Abu Dhabi elite. The former Newmarket café owner, model and ex-girlfriend of the UK’s Prince Andrew had proved a skilled networker in her own right, artfully inserting herself inside the inner circles of various Gulf royals as she reinvented herself as a financier after the failure of a technology venture in Britain in 2002.

But it was the Barclays transaction that signalled her arrival as a player in the region.

Euromoney has learnt that the £3.5 billion Abu Dhabi investment in Barclays was no sure thing. It was a deal consummated as the UK financial system tottered; a transaction involving a key UK bank and crucial to the continuing health of the UK economy yet mostly arranged outside the reach and scrutiny of UK regulators who feared yet another taxpayer-funded bank bailout after the Lloyds, RBS and Northern Rock crises of the 2008 global banking meltdown.

In the months following the Mansour deal, many in the City, Fleet Street and around the Gulf gushingly portrayed Staveley as a rainmaking superwoman, the “toast of Abu Dhabi” who had pocketed anything from £40 million to that £110 million in fees – reward for a tough year of power schmoozing, cajoling, jet-setting and seat-of-the-pants negotiating of the Barclays transaction. None of it was denied by the publicity-conscious Staveley.

But the fact was that until that email from her private banker, Amanda Staveley hadn’t knowingly received anything much at all for Barclays, except perhaps the ego-boosting promotion. In fact, she and Craig Eadie were close to open warfare with the Mansour interests over the division of the Barclays spoils.

Indeed, Staveley should perhaps count herself fortunate that she got anything at all for the Barclays deal. Through late 2008-early 2009 – crucially, after the Barclays/Mansour relationship had been secured – her relations with the Mansour camp had deteriorated to such a degree that as Christmas approached in 2008, Staveley was given a deadline to accept just £5 million or get nothing at all.

At the heart of the argument over the fees paid to Staveley and PCP appears to be not just the advisory role that she and her company played, but also the fact that at one point her firm – or at least the special purpose vehicles set up within it – were acting as principals in Mansour’s investment in Barclays.

Before the completion of the investment, David Forbes, a senior adviser to Ipic, emailed Staveley to tell her: “Further to our email of yesterday, Khadem has just confirmed that he does not envisage any requirement for PCP to be an equity investor in Project Mandolin.”

Khadem is Forbes’s boss, the head of Ipic. Also addressed in the email was Ali Jassim, a close associate of Sheikh Mansour.

The problem was that the three vehicles – PCP Gulf Invest 1, 2 and 3 – were originally registered in the names of Staveley and Eadie, rather than in Mansour’s.

This issue appeared to be addressed in a draft letter seen by Euromoney, seemingly on behalf of KAQ Holdings – the personal holding company of Khadem Al Qubaisi. In it, KAQ offers Staveley and Eadie an aggregate fee of £5 million “in connection with your involvement in the investments to be made by PCP Gulf Invest... in Barclays as part of its capital raising exercise”.

As part of the agreement, Staveley, Eadie and the company would promise not to “describe, or allow others to describe, yourselves or PCP or any entity in which you have any interests as agents of representatives of... the PCP entities”. These included KAQ Holding, Ipic and Sheikh Mansour. Nor could Staveley and Eadie “hold out... to have had any authority in relation to the PCP entities”.

Finally, and in perhaps a prescient paragraph relating to Staveley’s cultivated media presence, the documents prevent her from making “any announcement whatsoever or enter into any discussions with any person, or give any interview, in any media form, to any person in relation to the transaction”.

Khadem AI Qubaisi’s personal investment company, KAQ Holdings, ended up holding Mansour’s Barclays securities


In all of this, the role of Craig Eadie can look confusing. Forsters, where he was a solicitor and partner, acted as legal adviser to PCP on many of its dealings. Eadie was also a founding partner of PCP. In September 2009, he left Forsters to join PCP full time.

A torturous round of negotiations followed. At one point PCP offered to accept a fee of £25 million from KAQ Holding; but at the same time, it was claiming to be entitled to a fee of £41.7 million.

In March 2009 and four months after Mansour's Barclays investment, Staveley’s office prepared supporting material in advance of a rare audience with the elusive sheikh to secure the commissions she believed owed to her.

Emails circulating her office describe the ill-feeling over who was paying PCP what and when. “To date we have received NO FEES regarding (the) Barclays transaction completed on 27th November 08,” her PCP adviser, Omar Hassanieh, wrote to Staveley as part of an email outlining the documents they would take to the meeting.

If the reply of Staveley’s PA, Jo Mills, is anything to go by, PCP was ready for a fight: “We are going to go armed and we will get this fucking money,” she said.

Eventually a compromise was reached. An agreement was made between the key players: on one side, the PCP parties, comprising PCP Capital Partners, Staveley, Eadie and former UK MP and government minister David Mellor. And on the other side the KAQ parties: KAQ Holdings, the three PCP Gulf Invest vehicles and Ipic. At no point is Sheikh Mansour himself mentioned as a party to the transaction, even though he had been presented as the ultimate investor in Barclays.

The fee agreed, on the basis that all future claims against KAQ parties as well as Sheikh Mansour were dropped, was £30 million.

A month later, that money less £500,000 entered Staveley’s account. The row never went to trial. It was certainly not in Staveley’s interests for it to do so; a public dispute over money with a figure as important as Sheikh Mansour would have damaged her ability to do business in the Middle East, where discretion is so highly valued.

As it stands, Staveley’s position as a dealmaker to the Gulf elite is intact. Most recently, she has been looking to invest in the London property sector – in April, she revealed a near £300 million-plus bid by PCP Capital Partners and Qatar First Bank for a property in the exclusive Grosvenor Square.

Staveley continues to gain attention in the media. A profile in the Daily Mail, published last September as the SFO investigation was launched, ran with the headline: “How this former waitress went on to ‘save’ Barclays...and is laughing all the way to the bank”.

How close she came to real legal action against Mansour is unclear. However she did, in November last year, launch proceedings against Ukrainian oligarch Gennadiy Bogolyubov over an alleged failure to pay a £2.3 million success fee for his purchase of One Trafalgar Square.

What remains least clear of all is what happened to the other £80.5 million in fees that Barclays paid to Mansour in November 2008.

All the indications are that the £110 million fees were divided up on a rough-and-ready basis between Sheikh Mansour’s associates and advisers, once the fees from lawyers and bankers had been deducted. At one point, it was suggested that the remaining money be divided up between four of them equally: Staveley; Khadem Al Qubaisi; Al Jassim; and one Said, whose role or identity is not clear.

The figure they had in mind? £20.7 million. Staveley, in the end, received considerably more than that.