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Barclays iShares sale getting closer

23 March 2009 / by Rachael Stiles
Barclays is getting closer to closing a deal on the sale of iShares, its fund management business, to an American private equity group.

It emerged last week that Barclays was considering selling iShares – which could raise up to £3.5billion capital – in case it has to take part in the Government's Asset Protection Scheme.

The Government's Asset Protection Scheme insures banks toxic assets; RBS and Lloyds Banking Group have already taken part in return for the Government taking stakes in both banks.

If it does have to accept taxpayer's cash to regain stability, Barclays wants to have capital available to pay the premium for joining the insurance scheme, so that it does not have to pay in shares as its rivals have done.

Analysts have suggested that Barclays may have to hand over as much as a 40 per cent stake to the Government if it fails to raise the funds.

Barclays is in talks with US private equity firm Hellman & Friedman, the Sunday Times has reported, which has joined forces with several other private equity houses – Carlyle, TPG and Apax – as part of a joint bid for the purchase.

The bank said in a statement last week that it has "held discussions with a number of potentially interested parties as part of its practice of regularly reviewing the Group's portfolio of businesses."

Last October it accepted a £7billion cash injection from its Middle Eastern investors to try and avoid accepting help from the Government's recapitalisation scheme, but if it is to participate it only has until the deadline on March 31 to decide.

The bank's foreign investors are also thought to be interested in buying the fund management arm, which is part of Barclays Global Investments.

It is thought that a deal for iShares could be settled within the next few days.

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