Sovereign wealth fund snaps up £1.9bn stake in Iberdrola

QATAR is to buy a 6.16 per cent stake in ScottishPower-owner Iberdrola for €2.2 billion (£1.9bn), helping the Spanish utility giant to finance its Brazilian operations and further diluting unwanted suitor ACS.

Iberdrola, which is saddled with €24bn of debt, will issue and sell 338 million shares at €5.63 each to Qatar Holding, the state's sovereign wealth fund.

Spanish builder ACS holds about 20 per cent of Iberdrola and plans to purchase more shares in its drive to win a seat on the utility's board, which it is also fighting for in the courts.

Qatar also took a 9.1 per cent stake in ACS's other buy-out target, German builder Hochtief.

Iberdrola's share issue, priced at a 5.5 per cent discount to Friday's closing level, will dilute existing shareholders by 5.81 per cent. The remaining 0.35 per cent promised to the Qataris will come from treasury stock.

Iberdrola, led by chief executive and chairman Ignacio Galn, also cancelled an issue of 247 million shares announced last week to finance its all-share bid for outstanding stock in its Iberdrola Renovables unit, and will instead buy back the shares on the market.

Iberdrola aims to repurchase the 20 per cent of Renovables it listed in 2007, offering shareholders one of its own shares for every two they own in the unit.

Iberdrola agreed with Qatar Holding to explore investment opportunities in Latin America, where it recently bought Brazilian utility Elektro.

The Spanish utility spent $2.4bn (1.5bn) buying Elektro, which it wants to merge with its 39 per cent-owned NeoEnergia affiliate, where it has a controlling stake.