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Rating:Who Might Buy Barclays' iShares?
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Tuesday, March 17, 2009

Who Might Buy Barclays' iShares?

by: Armie Margaret Lee

Will Barclays' iShares ETF business end up in the hands of a private equity firm? That's a likely scenario, according to The Wall Street Journal, noting that many of Barclays' rivals in the ETF space are struggling and likely don't have sufficient financial muscle to bid for the business.

An unnamed source told the Journal that a private equity firm working in tandem with a sovereign wealth fund is among the likeliest buyers for iShares.

Barclays on Monday confirmed it is in talks to sell iShares (see The MFWire, 03/16/09).

A "person familiar with the matter" told the Journal that there are "dozens" of interested parties, including private equity firms. Due to the size of the transaction, some think a sovereign-wealth fund might participate, too.

The Journal earlier reported that iShares could fetch around 4 billion, or around $5.6 billion. That would work out to 2.6 percent of $215 billion in assets under management at the end of February.

As for Barclay's competitors in the ETF space, observers say those firms are not likely to purchase the business. Vanguard and State Street Global Advisors are much smaller than BGI. SSgA's parent, State Street Corp., may find it hard to buy iShares, as it is facing billions of dollars in unrealized losses on investment pools it runs. State Street's stock has fallen 70 percent in the past year. Other firms whose names have surfaced as possible buyers include Northern Trust, which is in "relatively decent shape." However, the Chicago-based firm exited the ETF business last month (see The MFWire, 01/27/09). 

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