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Following months of frenzied speculation as to who would snap up the market-leading iShares fund family, BlackRock emerged as the clear front-runner earlier this month, draining much of the drama out of the high-profile shopping of the fund family.

Or so it seemed. Although BlackRock’s acquisition appeared to unfold smoothly, it now appears that unexpected developments in the 11th hour threatened to derail funding of the transaction, only to be resolved when an odd assortment of investors stepped up to the plate.

In a fascinating article, the Wall Street Journal’s Dennis Berman details the last minute dealings that nearly left BlackRock out in the cold when complications arose surrounding more than $2 billion of funding for the proposed deal. It was widely known that BlackRockneeded to raise capital in order to fund the acquisition, with numerous sources reporting that a significant portion of this money would likely come from sources in the Persian Gulf, including Kuwait’s KIO, the Qatar Investment Authority, and the government investment arm of Abu Dhabi.

Apparently BlackRock had worked through Amanda Staveley, head of PCP Capital Partners, a firm that has brokered numerous investments from the Gulf into British enterprises. Among Ms. Staveley’s most-publicized successes are the placement of nearly $5.8 billion from Abu Dhabi into Braclays in 2008 and arranging the takeover of soccer club Manchester City by a separate group of Abu Dhabi investors.

After being approached about participation in a round of investments to fund the iShares acquisition, Staveley apparently indicated to BlackRock CEO Laurence Fink that she had billions of investment dollars lined up from interested parties.

The evening before the transaction was to be announced, BlackRock executives became worried when Staveley failed to produce legally binding commitment letters from the investors, instead delivering commitments from special purpose vehicles under her control. Staveley insisted on confidentiality for the investors, a common practice in the Gulf.

While BlackRock pieced together that the money was coming from wealthy individual investors, it was unable to verify any identities.

Frustrated, BlackRock cut off talks with Staveley and raced to find more than $2 billion before its exclusivity period expired. By all accounts, this wasn’t actually much of a challenge for Fink, who readily secured the required commitments from a wide variety of sources, including PNC Financial Services Group, hedge fund Highfields Capital Management, and sovereign wealth funds from Singapore, China, and Kuwait.

To casual (and even professional) observers, the deal seemed to go of without a hitch, but Berman’s insight into the behind-the-scenes tensions leading up to the final hours indicate that the deal was, at least for a few moments, up in the air.

While it’s not clear that another buyer would have stepped in had BlackRock been unable to deliver the cash before the expiration of the exclusivity period, it certainly would have been interesting to see the market reaction if iShares had suddenly popped up for grabs again.

Disclosure: No positions at time of writing.

Source: Behind the Scenes of BlackRock's iShares Acquisition