March 23, 2009 at 2:00 pm by Tom Lydon
The fact that Barclays is shopping its line of iShares line of exchange traded funds (ETFs) has been the talk of the investing world. Now all eyes are watching to see who will snap them up.
Private equity groups have expressed interest in the funds, according to sources familiar with the situation. Hellman & Friedman, Bain Capital and TPG have all reportedly inquired, say Simon Meads and Megan Davies for Reuters.
Analysts have placed the value of iShares around $4.37 billion, more than one-third of Barclays’s market-cap. According to Dana Cimilluca and Sara Schaefer Munoz for The Wall Street Journal, Barclays is offering to finance nearly the entire sale price of iShares.
Barclays is one of the United Kingdom’s most thinly capitalized banks, and Barclays faces a March 31 deadline to decide whether it will take part in a government insurance plan that would keep a lid on banks’ losses.
David Hoffman for Investment News writes that many advisors are worried about the sale of iShares. If the line goes to an already large ETF provider, it could reduce competition by creating an industry behemoth.
Speculation has already begun. In addition to the private equity groups named above, some other big industry names are being batted around as potential buyers. State Street Global Advisors, Charles Schwab, Vanguard and Fidelity have all been mentioned. SSGA and Vanguard are considered unlikely to purchase iShares, however. It makes more sense that Fidelity or Schwab would buy the line, because it would be a natural move for these companies to expand their ETF presence.
Schwab recently filed to create its first ETF, while Fidelity has long just had a single fund since 2003: the Fidelity Nasdaq Composite Index Tracking Fund (ONEQ).
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