LONDON (Reuters) – Barclays (BARC.L) Private Equity (PE) is set to spin out of bank ownership this summer ahead of a new fundraising from the mid-market buyout specialist in the autumn, people familiar with the situation said.
Barclays PE is one of the few remaining buyout firms under bank control, but talks have been going on for over a year between the bank, the private equity division’s management and its investors about a possible spin-off.
Those talks are likely to result in a deal this summer, sources said, with Barclays PE management pushing for a deal in order to embark on their next fundraising round.
It is widely expected among the private equity investor community that the 2.4 billion euro ($3 billion) fund raised in 2007 would be the last under the Barclays umbrella. With some 70 percent of that buyout pot invested, the firm is nearing the 75 percent level where raising a new fund typically starts.
A management buyout is likely to be worth a limited amount to Barclays, one of the sources said, but would underline its drive to focus on core areas. That has intensified as regulators clamp down on banks’ involvement in higher risk businesses.
Britain’s second biggest bank recently called a halt to new deals at Barclays Ventures, the small-cap buyout arm focusing on companies worth 10 million to 50 million pounds ($14.4-71.9 million).
Barclays PE will target between 1.5 billion and 2 billion euros for its first independent fund, sources said. It is unclear whether Barclays, which put 650 million euros into the last fund, will commit anything to the new fund.
Private equity firms are working harder to raise the same amount of capital as during the buyout boom as cash-strapped investors tell them they have less to invest.
Buyout house BC Partners [BCPRT.UL] is set to launch a 5.9 billion euro fund launch later this year but expects to have to sign up more investors to achieve the same amount it raised in 2005.
Barclays PE also intends to focus on deals towards the lower end of its 50 million to 250 million pounds enterprise value range as it sees larger deals being more competitive and prices fuller, one of the sources said.
By Simon Meads
(Additional reporting by Steve Slater; Editing by Sharon Lindores) ($1=.7997 Euro) ($1=.6959 Pound)