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Rating:iShares' Kranefuss, Now on the Non-Exec Chairman's Seat, Looks Ahead Not Rated 0.0 Email Routing List Email & Route  Print Print
Tuesday, April 21, 2009

iShares' Kranefuss, Now on the Non-Exec Chairman's Seat, Looks Ahead

Reported by Armie Margaret Lee

Lee Kranefuss, CEO of Barclays' iShares business who took on the role of non-executive chairman when the sale was announced earlier this month, recently spoke to The MFWire about his role, how iShares intends to maintain its market dominance, and the significance of the deal to iShares and the ETF business in general.

Lee Kranefuss
Non-Executive Chairman
"The business is in the same hands it's been in," said Kranefuss, 47, who joined Barclays Global Investors in 1997 after a stint at The Boston Consulting Group. "What I'm doing is spending more of my time away from the day-to-day and concentrating on strategy and maintaining continuity."

"There are a great number of executive-level things that need to be managed around the world -- boards, regulators, and stakeholder issues between Barclays and CVC affecting the transition," he said.

The $4.4 billion sale (see The MFWire, 04/09/09) to Blue Sparkle, a limited partnership formed by private equity firm CVC Capital Partners, is expected to close in November. Barclays, as was announced, can also solicit other proposals for iShares until mid-June, with the 45-day go-shop period kicking off Wednesday last week.

When the sale to Blue Sparkle was announced April 9, Barclays said Kranefuss, U.S. iShares CEO Mike Latham and iShares Europe CEO Rory Torbin will constitute the core management team following the close of the deal.

Kranefuss will serve as non-executive chairman until the deal closes. "We're working out what the exact roles and titles will be when the deal closes," he said. "I intend to stay with the business."

Asked how iShares plans to keep its market dominance, he said: "What's led to the success we've had has been our sticking to our core values. iShares has always been built around serving the professional investor and doing so with transparent, well-engineered, long-term products."

"That's what led to the success, and we'll continue to go down that path, providing very high quality transparent tools," he said.

iShares plans to continue growing its product menu, he added.

At present, iShares has about 620 employees in 14 countries. Kranefuss declined to discuss specific employees, but said: "I think that by and large, the intent is anyone who is working in the iShares organization globally will become part of the standalone company," Kranefuss said. The iShares employees will be joined by some others from BGI.

"We're still working out the details on how many more," he said.

He called the interest generated by iShares "an endorsement and validation" of the business, Kranefuss said.

"The fact that iShares drew such interest, and in this market, is proof that ETFs are here to stay and iShares is the most successful player in the market," he added.

The $4.4 billion (3 billion pounds) price tag represents 10.1 times iShares' 2008 EBITDA of 294 million pounds. It also works out to about 1.3 percent of iShares' end-2008 AUM of 226 billion pounds. 

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