Private equity may not play a prominent role as it relates to buying up toxic assets, but sponsors are actively seeking the money-making operations of various banking institutions. The latest to dive into the fray was CVC Capital Partners, which acquired the iShares exchange-traded-funds business of Barclays Global Investors.
CVC is reportedly paying $4.4 billion, although the deal includes a go-shop agreement that will give rival bidders another 45 days to submit a better offer.
The asset management arm, Barclays Global Fund Advisors, had approximately $325 billion of assets under management as of December 2008.
According to a Collins Stewart research note, found on Thomson One Analytics, the decision to sell iShares represents an about face for the UK bank. The sale talks are somewhat of a surprise as management had indicated this business as being core for several years now, Collins Stewart analyst Alex Potter wrote back in March, when Barclays first confirmed the talks. Tough markets evidently lead to tough decisions being taken.
Private equity has sniffed around the financial services space as the investment banks consider shuttling attractive assets to shore up liquidity. Advent International, for instance, recently acquired the transaction processing unit of Fifth Third Bancorp, paying $561 million for a control stake in the company. David Mussafer, a managing partner at Advent, told Mergers & Acquisitions at the time that the firm is also closely examining the asset management space and other transaction processing businesses.
PE firms are also reported to be players in the bidding for American International Groups asset management business. The Wall Street Journal cited names such as Hellman & Friedman, TA Associates and Rhone Group as among those considering offers. Hellman & Friedman, marketwatchers may remember, teamed up with Bain Capital to pursue Lehmans former asset management arm, Neuberger Berman, which was eventually sold to management.
CVC, meanwhile, has rarely invested in the financial services space, though last September, it launched a new group, headed by Jonathan Feuer and Peter Rutland, to pursue deals in the segment. CVC also brought in Charles-Henri Filippi and Larry Klane as advisers late last year. Filippi had previously served as chairman and CEO of HSBC France, while Klane had served as president of the Global Financial Services unit of Capital One Financial Corp.