The Qatari rescue investment in Barclays at the height of last autumn’s financial crisis saw the Arab emirate sitting yesterday on paper profits of more than £700 million.

The Qatar Investment Authority (QIA), the sovereign wealth fund, and Challenger, a vehicle backed by the Qatari Royal Family, bought £800 million of convertible notes that could be changed into Barclays shares at 153p last October.

Under the terms of the agreement these notes converted into Barclay’s shares at the end of last month.

At Barclays’ closing share price of 292¾p yesterday, the investment is worth about £1.53 billion. However, the QIA and Challenger will realise the profit only if they sell up.

At present the Qataris have holdings and warrants equivalent to a stake of about 15 per cent in the bank. QIA was one of two Middle Eastern investors that Barclays turned to last October as part of a £7.3 billion capital raising through an institutional placement, which helped the bank to avoid having to take Government capital.

The other investor was Abu Dhabi, which pocketed almost £1.5 billion in profit last month after selling a near-12 per cent stake in Barclays after only eight months.

The Abu Dhabi-based International Petroleum Investment Company — headed by Sheikh Mansour Bin Zayed al-Nahyan, the Manchester City Football Club owner — sold more than 1.3 billion shares.

The sheikh bought £2 billion of the convertible notes, which were sold for 265p, netting him the huge profit. Unlike Qatar, which had lost money on a previous injection in Barclays, Abu Dhabi and Sheikh Mansour were new to the bank when asked for rescue capital during the crisis.

Shares in Barclays fell below 50p in January — leaving the Gulf investors’ share options substantially in the red — but have bounced back as the threat of nationalisation receded.

Last year Barclays snubbed a Government offer of cash, saying that it could raise the money it needed. It was a strategy that risked alienating shareholders, but the bank, which bought the American operation of Lehman Brothers, wanted to maintain its commercial freedom.

The QIA, which in 2007 was forced to abandon a £10.6 billion bid for J Sainsbury, has had mixed returns from its UK investments. Four Seasons HealthCare is seeking to reorganise debt used to fund its takeover by QIA-backed Three Delta in 2006 after it failed to refinance senior loans in September. The nursing-home operator had until yesterday to agree to swap about £1.4 billion of debt for equity, or face being sold.

Hatfield Philips, the debt administrator representing senior lenders, is due to begin the sale process unless an agreement is reached.

Four Seasons is expected to make a statement about the restructuring or sale this week. A sale may mean junior lenders will not recoup their dues as its value has been hurt by falling property prices.

Four Seasons was one of the deals negotiated by Paul Taylor, who advised the QIA through his Three Delta investment fund.

Its 26 per cent stake in J Sainsbury is still trading at a big loss to the purchase price. Meanwhile, QIA is in exclusive talks with Porsche, the German luxury sports car maker, over taking a possible stake in the company.

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