Barclays sells fund management arm

12 June 2009

Banking behemoth Barclays has agreed the sale of its fund management arm - Barclays Global Investors - to US investment management firm BlackRock for £8.2 billion.
Under the deal, BlackRock will pay a combination of cash and shares, with staff from Barclays - who own 4.5% of BGI - sharing £365 million from the sale.
The enlarged group will be called BlackRock Global Investors when the deal completes in the fourth quarter. It will be the world's largest asset manager with over £1.64 trillion assets under management, according to BlackRock.
Having stoutly refused to join rivals Royal Bank of Scotland (RBS) and Lloyds Banking Group in taking government bail-out money, the sale will help boost Barclays' balance sheet, while BlackRock will be able to utilise the global reach of BGI - which has operations in 15 countries.
News of the deal will come as a blow to private equity firm CVC Capital Partners, which had clinched a deal with Barclays to buy its iShares arm (also under the BGI umbrella). The deal, worth £3 million, included a 'go-shop' clause that gives Barclays the opportunity to find another bidder.

BlackRock's proposed purchase means Barclays will have to pay CVC $175 million as part of the clause, unless the latter firm decides to come in with a higher offer for the whole BGI offering and start a bidding war.
The structure of the deal means Barclays will retain 19.9% of the enlarged business.
Barclays' shares were down 1.6% to 299.5p in early trading.

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