CVC Capital Partners Wins Barclays iShares Bid

April 9, 2009 ( - U.K. bank Barclays PLC agreed Thursday to sell its iShares exchange-traded funds business to European private-equity firm CVC Capital Partners.

According to Reuters, the deal, which will reap £3 billion ($4.41 billion), brings in cash Barclays can use to increase its buffer against credit losses as the economy worsens. Barclays also has an option to receive 20% of the value of iShares in cash following a future increase in the value of the business.

To get the deal done, the bank agreed to lend CVC £2.1 billion (see Barclays Ready to Announce iShares Deal: WSJ ). Reuters noted that the sell represents a sacrifice for Barclays, underscoring the bank’s eagerness to raise cash and avoid seeking state aid as some of its rivals have done. The iShares unit, offering some 360 exchange-traded funds globally, contributed a significant chunk of the bank’s profits in 2008, the news report said.

The sale caps several weeks of talks with a variety of interested buyers, with CVC coming into the game late (see CVC Capital Partners in Talks to Buy iShares Business ).