Barclays Private Equity To Launch New Fund With €1.5 Billion ($1.91 Billion) Target

(Reuters) – Barclays Private Equity plans to raise at least 1.5 billion euros ($1.91 billion) for a new fund as it prepares to fly the nest and spin off from its parent bank in a few months, the firm’s co-head of private equity said. “The day we think the fund is what we want it to be, we will become independent,” Gonzague de Blignieres told a Reuters private equity forum in Paris on Thursday.

In the wake of the financial crisis, banks are spinning off their private equity arms in fear that new financial regulation will prevent them from betting their own money or engaging in investments seen as riskier.

French bank Natixis (CNAT.PA: Quote, Profile, Research, Stock Buzz) will complete the sale of its domestic private-equity activities to AXA Private Equity for 534 million euros by the end of September. According to media reports both Goldman Sachs and CSFB are also considering selling off their private equity divisions.

Parent Barclays (BARC.L: Quote, Profile, Research, Stock Buzz) put 600 million euros into Barclays Private Equity’s 2.4 billion Fund 3, but will not contribute to the new planned Fund 4, de Blignieres said.

Barclays Private Equity, which is based in France, the UK and Germany, will not change its headquarters or management if it becomes independent, said de Blignieres, who is managing director, Paris.

He added that independence hinged on the success of Fund 4.

Like other private equity players, Barclays Private Equity has carried out few purchases or sales since the financial crisis. It recently failed to get the price it wanted for private hospital group Medi-Partenaires.

De Blignieres said it was possible to raise debt for good transactions, but that purchases in the industry had been limited by sellers holding back and prices remaining high. The market will get going strongly again next year, he said.

“A lot of funds will be obliged to sell assets to give money back to their investors. That will kick off secondary transactions again,” he said.

While 2010 will clearly be stronger than 2009, during the financial crisis, next year will likely return to the levels of activity seen in 2005, he added.

Barclays Private Equity will probably abandon the sale of Medi-Partenaires, de Blignieres said. It has also decided against a stock market listing as it would have to raise “a big amount of cash” to reimburse the debt.

Instead, it will probably restructure the company’s debt, with shareholders injecting money to finance acquisitions.

($1=.7871 Euro)

By Nina Sovich and Julien Ponthus
(Additional reporting by Matthieu Protard, James Regan and Jean-Michel Belot; Editing by Dominique Vidalon and James Regan)