Barclays' BGI sell-off gathers pace

Rhian Nicholson
08.06.09 08:54

Barclays' (BARC) plans to sell off its fund management arm, Barclays Global Investors (BGI), are steaming ahead following discussions with "a number of parties".

US money manager BlackRock is the frontrunner although reports suggest Bank of Mellon New York is also still in the frame for a potential $12 billion deal.

Barclays confirmed this morning that it received other proposals for iShares and its wider BGI arm after announcing the $4.4 billion sale of iShares, its exchange traded fund business, to CVC Capital Partners back in April.

Under the terms of that deal, it was able to continue to consider other offers until 18 June. However, if it goes with another buyer, it will have to pay a $175 million fee to CVC.

Barclays warned that talks currently underway could lead to nothing. It said: "The discussions are not yet concluded and there are a number of significant open issues which could affect the nature and terms of any transaction.

"There is no certainty that these discussions will result in Barclays concluding a different transaction than that announced on 9 April with CVC regarding iShares."

However, if BlackRock snaps up BGI, reports suggest Barclays could take a stake of up to 20% with the deal structured in a similar manner to the iShares arrangement with CVC. Barclays president Bob Diamond would also be likely to join the board.

At the height of the crisis, Barclays decided to sell its profitable BGI division - which has about $1 trillion of funds under management - in a bid to avoid joining Royal Bank of Scotland (RBS) and Lloyds Banking Group (LLOY) under the Government's wing.

Barclays shares dropped more than 2% to 279p.

Watch our iBall TV episode The Three Little Pigs for an alternative view of the bank.

Barclays' BGI sell-off gathers pace

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