Qatar tops up war chest by selling VW pref shares

By Christiaan Hetzner and John Irish

FRANKFURT/DUBAI (Reuters) - 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.