Barclays in talks on £3bn iShares deal
By Martin Arnold, Peter Thal Larsen and Jane Croft in London
Published: March 31 2009 11:52 | Last updated: March 31 2009 14:17
Barclays has entered exclusive negotiations with CVC Capital Partners, the private equity group, to sell the exchange traded funds business of its iShares subsidiary in a deal worth about £3bn.
The move came a day after Barclays shunned a UK government insurance scheme designed to ring-fence toxic assets on banks’ balance sheets.
EDITOR’S CHOICE
Barclays shuns insurance plan - Mar-31
UK banks set for recovery, says bail-out chief - Mar-31
In depth: UK banks - Mar-08
Lombard: Keeping the Houdinis of Canary Wharf on stage - Mar-31
Barclays soars after passing stress test - Mar-27
Barclays loan book under scrutiny - Mar-26
London-based CVC, which has one of the biggest war chests of any private equity group after raising a new €11bn (£10.2bn, $14.6bn) fund last year, has seen off competition from two rival private equity consortia.
The potential deal would be 60-70 per cent financed by a loan from Barclays, which will also receive warrants worth 20 per cent of the equity in the buyout, giving it a share of the upside if the business increases in value.
The deal does not include iShares’s securities lending arm, which lends securities, such as shares, to hedge funds and other investors that want to sell them short. Private equity buyers were wary of this business because it would have imposed additional regulatory requirements.
The headline price of £3bn values iShares at around 10 times its earnings before interest, tax, depreciation and amortisation. The sale is likely to boost Barclays’ tier one capital by about 50 basis points.
It will also allow Barclays to book a hefty capital gain on the sale of the division, which the bank has largely built up from scratch. The securities lending arm, generating about £200m of ebitda, would have raised a further £1.4bn if it had been sold.
The bank on Monday decided not to take part in the government toxic asset insurance scheme following talks with major investors and after an extreme stress test by City regulators last week found it did not need to raise fresh capital.
The decision means Barclays remains free of government interference, unlike rivals Lloyds Banking Group and Royal Bank of Scotland, which have ended up handing big stakes to the taxpayer in return for insuring assets.
Barclays had looked at taking part in the insurance scheme and paying the fee in cash rather than issuing shares to the government. But it concluded that the economics of participating did not stack up. Taking part in the scheme would have also subjected Barclays to new controls on pay and bonuses.
The bank’s shares were little changed in Tuesday afternoon trading, slipping ½ p to 148.6p, having fallen 14 per cent on Monday.
The detailed stress tests carried out by the Financial Services Authority examined how Barclays would perform in a UK recession lasting at least two years and tested a number of different scenarios including a 50 per cent fall in house prices as well as declines in gross domestic product and in commercial property.
Some of the tests undertaken by the FSA involved Barclays taking certain management actions such as selling iShares, its fast-growing asset management division specialising in exchange traded funds – investment vehicles that track stock market indices or a sets.
CVC saw off competition from rival bidders Bain Capital and Colony Capital, and Hellman & Friedman and Apax Partners. Other potential bidders, including Goldman Sachs, dropped out over the weekend.
Bob Diamond, Barclays’ president, on Tuesday highlighted the strong growth in the bank’s foreign exchange and fixed income operations following its takeover of the US assets of Lehman Brothers, the failed Wall Street bank.
Speaking at a conference in London organised by Morgan Stanley, Mr Diamond said client trading volumes in foreign exchange in the first three months of the year were almost double the figure for the first quarter of 2007. Volumes in fixed income had increased by 65 per cent over the same period.
By Martin Arnold, Peter Thal Larsen and Jane Croft in London
Published: March 31 2009 11:52 | Last updated: March 31 2009 14:17
Barclays has entered exclusive negotiations with CVC Capital Partners, the private equity group, to sell the exchange traded funds business of its iShares subsidiary in a deal worth about £3bn.
The move came a day after Barclays shunned a UK government insurance scheme designed to ring-fence toxic assets on banks’ balance sheets.
EDITOR’S CHOICE
Barclays shuns insurance plan - Mar-31
UK banks set for recovery, says bail-out chief - Mar-31
In depth: UK banks - Mar-08
Lombard: Keeping the Houdinis of Canary Wharf on stage - Mar-31
Barclays soars after passing stress test - Mar-27
Barclays loan book under scrutiny - Mar-26
London-based CVC, which has one of the biggest war chests of any private equity group after raising a new €11bn (£10.2bn, $14.6bn) fund last year, has seen off competition from two rival private equity consortia.
The potential deal would be 60-70 per cent financed by a loan from Barclays, which will also receive warrants worth 20 per cent of the equity in the buyout, giving it a share of the upside if the business increases in value.
The deal does not include iShares’s securities lending arm, which lends securities, such as shares, to hedge funds and other investors that want to sell them short. Private equity buyers were wary of this business because it would have imposed additional regulatory requirements.
The headline price of £3bn values iShares at around 10 times its earnings before interest, tax, depreciation and amortisation. The sale is likely to boost Barclays’ tier one capital by about 50 basis points.
It will also allow Barclays to book a hefty capital gain on the sale of the division, which the bank has largely built up from scratch. The securities lending arm, generating about £200m of ebitda, would have raised a further £1.4bn if it had been sold.
The bank on Monday decided not to take part in the government toxic asset insurance scheme following talks with major investors and after an extreme stress test by City regulators last week found it did not need to raise fresh capital.
The decision means Barclays remains free of government interference, unlike rivals Lloyds Banking Group and Royal Bank of Scotland, which have ended up handing big stakes to the taxpayer in return for insuring assets.
Barclays had looked at taking part in the insurance scheme and paying the fee in cash rather than issuing shares to the government. But it concluded that the economics of participating did not stack up. Taking part in the scheme would have also subjected Barclays to new controls on pay and bonuses.
The bank’s shares were little changed in Tuesday afternoon trading, slipping ½ p to 148.6p, having fallen 14 per cent on Monday.
The detailed stress tests carried out by the Financial Services Authority examined how Barclays would perform in a UK recession lasting at least two years and tested a number of different scenarios including a 50 per cent fall in house prices as well as declines in gross domestic product and in commercial property.
Some of the tests undertaken by the FSA involved Barclays taking certain management actions such as selling iShares, its fast-growing asset management division specialising in exchange traded funds – investment vehicles that track stock market indices or a sets.
CVC saw off competition from rival bidders Bain Capital and Colony Capital, and Hellman & Friedman and Apax Partners. Other potential bidders, including Goldman Sachs, dropped out over the weekend.
Bob Diamond, Barclays’ president, on Tuesday highlighted the strong growth in the bank’s foreign exchange and fixed income operations following its takeover of the US assets of Lehman Brothers, the failed Wall Street bank.
Speaking at a conference in London organised by Morgan Stanley, Mr Diamond said client trading volumes in foreign exchange in the first three months of the year were almost double the figure for the first quarter of 2007. Volumes in fixed income had increased by 65 per cent over the same period.
Solgte de sidste i det andet depot i 1,45 Pound, ikke det bedste over dagen men købt i 1,04.
