By Matthew Hougan
What do iShares, Formula One, Tower Records and the Belgian Post Office have in common? Sometime next week, they'll probably all be owned by the same private equity firm.
That's right, it's (almost) official: Barclays issued a statement this morning confirming reports in the FT and elsewhere that its iShares unit was likely being sold to CVC Capital Partners. The Barclays statement read:
Barclays notes recent press comment regarding a possible sale of iShares. As announced on 16 March, Barclays has held discussions with a number of potentially interested parties.
We now have a preferred bidder, CVC Capital Partners. If these negotiations reach a satisfactory conclusion, it would lead to a sale of Barclays iShares business without the attributable securities lending business. Earlier speculation assumed the sale of both iShares and securities lending.
A further announcement will be made in due course.
So much for Jim Wiandt's recent blog, which was titled, iShares Sale Not Happening – Yet.
I'm surprised that Barclays (BCS) is willing to shop its crown jewel in such a difficult environment. The sale was originally being driven by reports that Barclays had to raise capital to avoid partial nationalization. But the British government subsequently conducted a stress test on the company, and found that no new money was needed, obviating the need for the fire sale.
For Barclays to go forward with it anyway is surprising. They must feel that they are getting a fair price from CVC; also, all the Barclays executives with shares in BGI must be feeling pretty excited about the payout. Otherwise, what's the rush in the current climate?
The deal could still fall apart, of course, but it's sure not looking that way now.
Who Is CVC Capital Partners?
According to its Web site, CVC Capital Partners is a Luxembourg-based private equity firm that's been operating for 27 years. The company says it "focuses on building businesses over the long-term, typically holding investments for five years or more."
Interestingly, the firm doesn't appear to have any investments in the financial services space. Its complete portfolio of 52 companies is listed here, and includes such brand names as the aforementioned Formula One, as well as a variety of industrial companies like Smurfit Kappa Packaging and significant retail brands like Samsonite, Skylark and Tower Records.
That's not to say that CVC won't do a good job driving iShares forward. It's a big outfit that has delivered strong returns for many years, and can certainly adapt to the financial services space. But it makes this already-unusual deal all the more unusual.