BARCLAYS EYES MORE SELL-OFFS
BARCLAYS is edging closer to a sale of its private equity business, just weeks after it offloaded its fund management unit Barclays Global Investors (BGI) to BlackRock.
The bank – widely seen as one of the big winners from the credit crunch – will meet with investors in Barclays Private Equity (BPE) this week to discuss a possible lucrative sale to add to its sale of BGI to the US investment manager.
Barclays, led by chief executive John Varley, has been pondering a sale of BPE, valued at around £3bn, since last year, as it attempted to build capital without taking government funding. Top dealmaker Roger Jenkins attended a meeting with investors at the end of 2008 to discuss a range of options, including a management buyout with BPE keeping a large stake.
But despite forecasting that its core tier one capital ratio will hit eight per cent with the sale of BGI – well above Financial Services Authority requirements – the bank is still willing to listen to offers for BPE. The fund is one of the largest mid-market specialists in Europe and is currently investing the €2.4bn (£2.1bn) it raised in 2007.
A spokesman for the bank declined to comment yesterday and sources familiar with the situation said that any deal would be a long way off.
Renewed talk of a sale of BPE came as it emerged that Barclays’ president Bob Diamond has seen his expected windfall from the sale of BGI drop by around £2m to £20m in the past month. A shareholder circular released by the bank showed that the value of the cash-plus-equity deal had fallen to $12.7bn as a result of BlackRock’s falling share price.
Alongside Diamond’s loss, about 410 employees of the fund-management unit will see their combined payout fall from £730m to £624m as a result.
However, Diamond still stands to make a substantial profit on the £6m he spent on shares and options between 2003 and 2009.
Barclays gained more capital from last month’s cash and stock sale of BGI to BlackRock, the US fund manager that has been one of the biggest winners of the credit crunch.
BlackRock, led by founder and chief executive Larry Fink, snapped up BGI for $13.5bn in a deal which created the world’s largest money manager.
The combined company, called BlackRock Global Investors, will have roughly $2.8 trillion of assets under management, more than double BlackRock’s former size.
Meanwhile, Barclay’s investment bank Barclays Capital (BarCap) has continued its hiring spree by poaching Citigroup’s Mark Todd as a managing director in mergers and acquisitions.
Barclays has snared some 450 new bankers from rivals such as Citigroup and Morgan Stanley over the past nine months, as it pushes on with a drive to topple Goldman Sachs as the world’s top investment bank.
Profit at BarCap soared 361 per cent to £907m in the first quarter on the back of last year’s acquisition of Lehman Brothers’ US operations.