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The Qatar Investment Authority plans to increase its stake in Credit Suisse by investing in a share sale alongside Saudi National Bank, according to people with knowledge of the talks.
The deal will result in up to a quarter of Credit Suisse stock being owned by Middle Eastern investors, as the scandal-plagued lender seeks to raise SFr4bn ($4bn) to fund a radical restructure.
Last week, the Swiss bank announced it would strip back and spin off its investment bank, reduce its global workforce by 9,000 and cut SFr2.5bn of costs in a three-year strategic revamp aimed at moving on from a succession of crises and quarterly losses.
Saudi National Bank — whose own largest shareholder is the Public Investment Fund, the Saudi sovereign wealth fund — has agreed to invest SFr1.5bn in Credit Suisse for a 9.9 per cent stake.
While the majority of the investment will be made through a SFr1.76bn initial share placement, to be signed off at an extraordinary general meeting on November 23, Saudi National Bank will also take part in a SFr2.24bn rights issue later in the year.
Saudi National Bank will be joined by two other investors in the share placement, including QIA, which already owns 5 per cent of Credit Suisse stock.
One person with knowledge of the deal said the third investor was a Swiss group, though not a rival bank.
Credit Suisse’s largest investor, US investment group Harris Associates, will not take part in the share placement, but is expected to buy more stock as part of the rights issue, according to people with knowledge of the deal.
Olayan Group, an investment company owned by a wealthy Saudi family, is also not expected to take part in the share placement, but would retain its stake of about 5 per cent in the bank by participating in the rights issue.
After the share sales, Saudi National Bank, QIA and Olayan will own between 20 and 25 per cent of Credit Suisse stock. Saudi National Bank is keeping its stake in the bank at less than 10 per cent to avoid complications with the Swiss regulator, according to people with knowledge of the plans.
The QIA started investing in Credit Suisse during the financial crisis. Olayan first acquired its stake in 1988.
Credit Suisse is acting as global co-ordinator on the rights offering and has enlisted Deutsche Bank, Morgan Stanley, RBC Capital Markets and Société Générale as lead underwriters. Over the weekend, Credit Suisse added 14 other banks to the syndicate.
“This was done as a show of strength to give comfort to the market,” said one of the bankers involved in the discussions.
Credit Suisse executives had been in discussions with some banks over the summer about a potential capital raise, according to people with knowledge of the plans. But those talks were formalised at the start of October as the bank fought back against social media rumours about its financial strength and new chief financial officer Dixit Joshi started his job.
Credit Suisse and the QIA declined to comment.
*This article has been amended since original publication to correct the timing of Olayan’s initial purchase of shares
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