Barclays, the UK's second-biggest bank, said today that it is in talks with the US private equity group BlackRock to sell its asset-management arm, Barclays Global Investors (BGI) in a deal worth approximately $13 billion (£8.1 billion).
The bank had been approached by many buyers for acquiring BGI after its April announcement of selling its iShares business to boost its capital.
The bank, however said that although it is in advanced talks with BlackRock, it is still talking to another buyer, which could possibly be Bank of New York Mellon, who may make a higher counter offer.
In April, ehe Canary Wharf- (London) based bank agreed to offload its iShares business, which is the exchange-traded funds arm of BGI to Blue Sparkle LP (''Bidco''), a new limited partnership established by private equity firm CVC Capital Partners Group for $4.4 billion (£3.0 billion).
The "go-shop" deal allowed Barclays to look for higher bids for iShares and BGI as a whole and Barclays would pay a $175 million break-up fee if it sells iShares to another buyer.
If the complex deal with San Francisco-based BlackRock succeeds, will see Barclays ending up with take a stake of up to 20 per cent in the US financial group and bring a windfall of $585 million to about 200 BGI employees, who have received the shares through compensation schemes.
Bob Diamond, the president of Barclays and chief executive of Barclays Capital, will be biggest gainer, since he is expected to make approximately $29.5 million, if the deal does go through.
BlackRock's chief executive Larry Fink is trying to rope in investors from the sovereign wealth funds from the Middle East like the Kuwait Investment Authority and the Qatar Investment Authority, to part finance the deal.
Although BlackRock, which has about $1.3 trillion assets under management, has emerged as the front-runner for acquiring BGI, BNY Mellon, formed in 2007 from the merger of the Bank of New York and Mellon, could make a higher counter offer.
A deal with Barclays for its BGI business would be the biggest acquisition made in the fund-management industry and enhance BlackRock's assets under management to approximately $2.81 trillion.
Barclays will be looking for bids in the range of $10 billion to $13 billion for its BGI business, according to analysts.
Barclays said in a statement today, "Following the announcement by Barclays of the sale of its iShares business to CVC Capital Partners for a total consideration of approximately $4.4 billion on 9 April 2009, Barclays has received other proposals for iShares and the broader BGI business.''
''In assessing such proposals, Barclays has had discussions with a number of parties, including with BlackRock, about both iShares and BGI. The discussions are not yet concluded and there are a number of significant open issues which could affect the nature and terms of any transaction. There is no certainty that these discussions will result in Barclays concluding a different transaction than that announced on 9 April with CVC regarding iShares,'' it added.