London: Barclays Plc is in talks to sell Barclays Global Investors (BGI), the British bank said on Monday, with US fund manager BlackRock the frontrunner to land the asset manager, according to people familiar with the matter.
BlackRock and Bank of New York Mellon are both in talks to buy BGI in a deal that could be worth about $12 billion and might come early this week, the sources said, who asked not to be named as the talks are confidential.
The deal could see Barclays take a stake of up to 20% in the enlarged asset manager in a deal structured similarly to its planned sale of iShares, the sources said.
Barclays said on Monday it had received proposals for BGI and iShares from a number of parties, including BlackRock, and was continuing talks. But there were still “a number of significant open issues which could affect the nature and terms of any transaction,” it said.
Blackrock confirmed in a separate statement that it is still in talks with Barclays about its potential purchase of BGI but there was no certainty a transaction would be agreed upon “or, if agreed upon, completed.”.
Barclays agreed to sell iShares, which is part of BGI, to buy-out house CVC for £3 billion ($4.8 billion) in April, but a “go shop” clause allows it to seek higher offers until June 18.
Barclays shares were roughly flat, shortly after opening. They closed at 285 pence on Friday.
Bankers told Reuters last month the bank would be willing to sell BGI if offers approached the $12 billion price level.
BlackRock is likely to get funding for a deal from Middle East investors, possibly including some Barclays shareholders, according to media reports.
The Qatar Investment Authority and Adia, the government investment arm of Abu Dhabi, are in talks alongside Kuwait’s KIO to inject $3 billion in BlackRock for a 12% stake, the UK’s Sunday Telegraph newspaper said.
Barclays is likely to get two seats on BlackRock’s board if it completes a deal, one of which is likely to go to Bob Diamond, president of the bank and head of BGI, the Telegraph said.
A deal would land a windfall for Diamond and hundreds of BGI employees due to a lucrative equity ownership plan dating back to 2000, that could leave staff owning 10% of BGI.
CVC has the right to match any rival bids for iShares — or all of BGI — and gets a $175 million break fee if it is left out of the deal.