Not too long ago, the Middle Eastern state of Qatar bought around 50 million preference shares of Volkswagen on its way to becoming the third-largest VW shareholder behind Porsche and VW’s home state of Lower Saxony. Qatar recently sold off 25 million of its preference shares, netting a cool $2.4 billion in the process.
Qatar’s reason for selling half of its shares in VW was to “to enhance the liquidity” of the stock. Another motivation was the quick profit the state made after VW’s preference shares increased to above €60 ($90) each. The state says it remains committed to VW and will reinvest in the company, continuing its plan to become the third largest shareholder.
“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.”
Initially, Qatar was going to invest in Porsche to help the company takeover VW. Once Porsche hit a credit crunch, the tables turned, and Porsche ended up selling nearly half of its VW shares to Qatar just to stay afloat. Porsche also agreed to a takeover by VW around the same time. VW will offer up to 135 million new preference shares in the first half of next year to raise liquidity to finalize the acquisition of Porsche.
While Qatar has not given any timeline as for when it will reinvest in VW, it is likely to acquire many of the new shares VW plans to offer. Snatching up a substantial number of the 135 million shares to be offered would put the state well on its way to becoming the third-largest VW shareholder.
Source: Automotive News