Qatar has sold half its Volkswagen preference shares, cashing in on recent gains and raising around 1.5 billion euros ($2.4 billion) for possible future deals.
VW preference shares -- widely expected to join Germany's blue-chip DAX index once VW ordinary voting shares drop out due to the low free float -- closed down nearly 16 percent at 60.22 euros.
That was just above the average placement price of 60 euros that Qatar achieved, a person close to the transaction said.
Qatar Holding (QH), the investment arm of the country's sovereign wealth fund, said it sold 25 million preference shares in Europe's biggest carmaker to enhance the liquidity of the stock, but said it remained committed to VW.
Qatar, the world's largest liquefied natural gas exporter has ramped up investments since the summer after a lull prompted by tumbling financial markets and falling oil revenue.
Qatar is exhibiting exit strategies akin to a private equity fund that makes wise profits and knows when to cash in, said John Sfakianakis, chief economist at Banque Saudi Fransi-Credit Agricole. It has shifted its investment interests as market dynamics change, and that is what they are doing now.
QH said it had agreed to a lock-up period for the rest of its non-voting VW preference shares until December 31 this year.
It said it would continue increasing its voting holding in Volkswagen as previously announced, to give Qatar the third-largest voting stake in VW behind automotive group Porsche SE and VW's home state of Lower Saxony. Qatar's voting stake in VW was 6.78 percent in August.
VW, which has around 105 million preferred shares in circulation, declined to comment. Hussein al-Abdullah, executive director of the Qatar Investment Authority (QIA), which controls QH, could not be reached for comment.
Credit Suisse and Goldman Sachs handled the share sale.
Volkswagen plans to carry out a capital increase in the first half of next year. It will issue up to 135 million new preference shares in order to raise money for its planned acquisition of Porsche's sports car business.
One analyst at a Frankfurt-based bank recommended that investors looking to gain exposure to VW should wait until at least January since there were plenty of preferred shares that would soon be looking for a home.
The stock overhang that was already there due to the capital increase has increased considerably, he said.
VW voting shares ended down 8 percent at 102 euros, the biggest decliners among German blue chips and European auto stocks.
Porsche said in August it was selling assets worth billions of euros to Qatar in a move to prop up its strained finances, a climbdown for a predator that once aimed to dominate VW but ended up agreeing to a takeover by its rival.
Reuters reported in August, citing sources close to the deal, that Qatar had bought from Porsche options on 50 percent of VW's preferred shares at a price of about 60 euros each.
ENERGY IN FOCUS
Qatar, ruled by Sheikh Hamad bin Khalifa Al-Thani, owns key stakes in banks Barclays and Credit Suisse, grocer Sainsbury, publisher Lagardere and the London Stock Exchange.
When Qatar sold shares in Barclays, rumors resurfaced that it might be amassing cash to make a bid for Sainsbury, in which Qatar has a 26 percent stake following a failed bid in 2007.
The QIA, estimated to have assets worth about $60 billion, has said it intends to focus on energy, commodities, food and water in a major strategic overhaul, and saw growth in emerging markets such as China and India.
Its agricultural arm in October said it was eyeing a stake in Russia's PAVA and was close to completing a number of deals to cultivate land and buy firms across Africa and Latin America.
However, since August the group has invested in UK real estate, becoming the largest shareholder in Songbird Estates. The QIA's property arm said on November 3 it planned to increase investment in UK property to 5 billion pounds from 3 billion pounds ($5 billion) after agreeing to buy the landmark U.S. embassy building in London.