BPE spin-off - still no firm agreement

Despite news to the contrary, Barclays has not yet reached any agreement to spin out its private equity arm, according to a source at the bank. Speculation began before Christmas regarding independence for Barclays Private Equity (BPE) and it is indeed marching down that path, though at the time of going to press the firm was still "sounding out views of its investors" while working on paperwork and figures, according to the source.

BPE has been active even as other buyout houses shy away from deals. Just this week the mid-market specialist backed the £64m buyout of marketing firm Bounty from Canadian parent Kaboose by providing £54m equity, and last month it took a majority stake in France's Compin Group.

The spin-off is likely to be a pre-cursor for the firm's fundraising of its fourth vehicle, which could go to market as early as next year. Its third fund closed on EUR2.4bn in September 2007, with roughly a fourth of the money put up by the captive's parent, down from half in BPE's first fund.

Talks to take the team independent are being led by Roger Jenkins and involve BPE chiefs Paul Goodson, Gonzague de Blignieres and Peter Hammermann.

Selling off its private equity arm is thought to be a step towards shoring up Barclays' balance sheet: while the move is unlikely to raise any serious money, it may improve ratios by reducing so-called "risky investments".

Barclays Ventures is another equity provider within the Barclays umbrella. The investor backs buyouts of UK businesses between £5-50m and has completed 20 deals in the last two years. The arm, fully funded by Barclays, is not thought to be seeking any move.

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