CVC Capital Partners in Talks to Buy iShares Business

March 31, 2009 ( - CVC Capital Partners is in exclusive talks with Barclays PLC to buy its exchange-traded funds business iShares, people familiar with the situation told Dow Jones Newswires.

The price is around £3 billion ($4.28 billion) – equivalent to 10 times the business’ earnings before interest, taxes, depreciation and amortization, the sources said, according to Dow Jones. The price does not include the securities lending business.

Barclays would get warrants equivalent to 20% in iShares as part of the deal, but the terms of the warrants have yet to be ironed out, one person familiar with the situation said. The warrants would allow Barclays to participate in any upside in the value of iShares in the future.

The deal is expected to be completed by the end of the week. The London-based buyout firm entered the auction relatively late in the process (see Report: iShares Bids Due Sunday ).

According to the news report, other bidders for iShares included a group comprising Hellman & Friedman and Apax Partners and another consortium made up of Colony Capital and Bain Capital. Goldman Sachs is also likely to have put in a bid, the sources said.