The Great Debate UK

Barclays shouldn’t vendor-finance iShares


REUTERS– Margaret Doyle is a Reuters columnist. The opinions expressed are her own –

Barclays’ hasty deal to sell iShares in April served its purpose. The $4.4 billion price-tag boosted the bank’s capital, thereby allowing it to dodge the government’s insurance scheme. Barclays should now seek better terms on the deal.

A month is a long time in the markets. Barclays sensibly agreed with the purchaser, the private equity firm CVC Capital Partners, a “go shop” clause, allowing it to seek higher bids before June 18.
Several other parties have now entered the fray. With the markets storming higher, it should be possible for Barclays to improve on the CVC deal.

One way to do this would be to get a higher price, and this should be possible. But Barclays should also negotiate better financing terms. The current terms hark back to the “cov-lite” days of private equity, where banks extended credit without strict covenants.