LONDON (ShareCast) - Barclays is to sell its near one-fifth stake in the worlds biggest asset manager, US firm Blackrock.
Barclays currently holds BlackRock common stock and Series B convertible participating preferred stock which together represent a 19.6% economic ownership interest in BlackRock. The Series B stock automatically converts into common stock upon a sale.
The transaction will be by way of an offering and related buyback by Blackrock itself, and is likely to raise around £3.8bn based on the valuation at the close of trading last Friday. In September 2011 Barclays' investment in BlackRock was written down to a fair value of £3.4bn. The subsequent increase in value of the stake has been taken to equity, the bank said, adding that for regulatory capital purposes, the increase is not recognised in Barclays core tier 1 capital.
Neverthless, the funds will be welcome as Barclays, like all UK banks, is under pressure to bolster its balance sheet as the Eurozone flirts with disaster.
Shortly after the announcement, at 11:00 London time, Barclays stock had risen 2.1%. In the last 12 months Barclays shares have declined 34%.