UK - Barclays to offload private equity business

Deborah
13 July 2009

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Barclays is reportedly close to a spin-off of its private equity business, just weeks after agreeing the sale of Barclays Global Investors (BGI), its fund management arm.

The bank is due to meet with investors in Barclays Private Equity (BPE) this week to discuss the divestment, which could generate up to £3bn. It is said that Barclays is likely to retain a stake in BPE.

The sale of BPE would provide a boost to the bank's capital ratios. As a result of the sale of BGI, Barclays' tier one ratio is already on course to reach 8%, above the FSA's target range of 6%-7%.

It has been reported that Barclays was in discussion with BPE at the end of last year about a possible spin-off, with options including a management buyout.

BPE is one of the largest mid-market private equity firms in Europe, specialising in investment in the financial services, engineering and consumer sectors. The firm is currently investing the EUR 2.4 bn fund it raised in 2007.

Barclays has been regarded as one of the winners of the credit crunch, as it has survived without the help of government funds. The bank has instead chosen to bolster its capital base itself, raising £7.3bn from its investors, as well as benefiting from the proceeds of the BGI sale.