Barclays, which refused to take government help, is looking to raise cash after $18.6 billion of credit losses and write downs. The London-based bank’s capital adequacy ratios are still lagging behind those of Lloyds Banking Group and Royal Bank of Scotland Group. Barclays had earlier held talks to sell the San Francisco-based Global Investors unit (BGI) to Bank of New York Mellon.
BlackRock may pitch in one or more Gulf-based investors such as Qatar Investment Authority and bodies from Abu Dhabi and Kuwait, to inject $3 billion to help finance the deal in exchange for a shareholding of about 12%. It is also expected that BlackRock may issue new equity to help pay for the deal. A purchase of San Francisco-based BGI would give BlackRock a total of $2.81 trillion in assets, and more customers outside the US.
The takeover of BGI by BlackRock will be the biggest ever in the fund-management industry, exceeding BlackRock’s $8.5 billion takeover of Merrill Lynch’s investment management business in 2006.
Because of anti-trust and other regulatory issues, Barclays’ is likely to get as many as two seats on the BlackRock board, one of which is almost certain to be occupied by Bob Diamond, President, Barclays and CEO, Barclays Capital.
