Barclays PLC To Spin Off Its Private Equity Arm – Source

Barclays Plc of the U.K. plans to spin off its private equity arm. Reuters reported the business will go to the managers of the fund in return for a share of future profits, according to a person familiar with the matter. The buyout of Barclays Private Equity will not take place until after the first closing of its latest fund sometime next year, the source told Reuters.

(Reuters) – British bank Barclays Plc (BARC.L: Quote, Profile, Research, Stock Buzz) is to spin off its private equity arm to the managers of the fund in return for a share of future profits, a person familiar with the matter said on Thursday.

The buyout of mid-market buyout specialist Barclays Private Equity (BPE), which has been expected for more than a year, will not be completed until the first closing of its latest fund some time next year, the source said.

A first close allows private equity firms to start investing from a new fund while continuing to raise further capital from investors.

BPE has not officially started raising its fourth fund, but is expected to go to investors to raise about 1.5 billion euros ($2.05 billion), the source said.

Barclays and BPE declined to comment.

A new management structure, led by Paris-based Guillaume Jacqueau, is expected to be in place at the time of the first closing of Fund IV.

Gonzague de Blignieres, BPE’s co-head of private equity, told Reuters in September the firm would become independent as the new fund takes shape. [ID:nLDE68814N] [ID:nLDE64N0RG]

BPE raised 2.4 billion euros in its last fund in 2007. About 70-75 percent of that buyout pot has been invested in deals such as Bounty, which sends out direct marketing packs to new mothers, and electrical engineering business Sicame.

Barclays joins others in retreating from private equity as regulators clamp down on banks’ involvement in higher-risk businesses.

The bank, which put 650 million euros into the last fund, will not commit anything to the new fund, de Blignieres said.

($1=.7331 Euro)

(Reporting by Steve Slater; editing by David Hulmes)