Barclays considers BGI sale

Newspaper reports suggest that British bank Barclays is looking to sell its San Francisco-based fund manager, Barclays Global Investors, for a figure in excess of $1bn.

Barclays has so far declined to comment on the rumours, originally published in the Wall Street Journal, which suggested that US private equity firm Hellman & Friedman was looking to back a leveraged buyout of the fund manager.

BGI is one of the world's largest institutional fund managers with about $770bn under management. Analysts believe that a $1bn sale price would be a fraction of the 3 per cent of assets under management that fund managers usually sell for. Barclays may settle for a price of $1bn because BGI assets are low-margin passive funds.

BGI was created by the acquisition by Barclays of two associated fund managers in June 1995. The company paid $440m for Wells Fargo Nikko Investment Advisers and the MasterWorks division of San Francisco Wells Fargo and merged them into BGI.

In 2001, BGI's operating profit was approximately $100m, representing about 2 per cent of Barclays' total.