Barclays could sell private equity arm

Focus t return to capital markets and banking

Travel Insurance News - 15/02/2010

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UK financial firm Barclay’s is looking into a deal to spin of its private equity arm to management in a deal worth £100 million, which could underline the company’s determination to focus on capital markets and banking operations. Last year, the bank sold off its fund management arm, BGI, to US group Blackrock, which boosted its capital at a time when banking regulators were demanding banks hold more reserves.

A sales of Barclays Private Equity (BPE) to the group headed by Paul Goodson and Rob Myers would be an advantage, if the UK adopts new US rules to curb the activities of international banking groups. US President Barack Obama suggested last month that US banks should be banned from being involved in hedge funds, private equity and derivatives trading.

Sources say that an MBO of Barclays’ private equity business has been under active consideration since the end of 2009, but an announcement has been delayed due to the complexity of a deal. It is believed that Barclays wants to retain a small stake in the operation and there have been some arguing about valuation and branding. It is estimated that BPE generated fees of £400 million last year.

BPE invests funds into businesses on behalf of insurance funds and City pensions, however Barclays also invests some of its own capital. The subsidiary describes itself as one of Europe’s leading mid-market private equity players, investing upwards of £450 million in any single transaction.

It is believed that Barclay’s will tomorrow report profits of about £11 billion.

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