Middle Eastern cash enables BlackRock to swoop for Barclays Global Investors

BlackRock's Middle East-funded capture of Barclays Global Investors (BGI) suggests investors in the region still have deep pockets for the right deal.

Barclays: sells BGI to BlackRock
Barclays: sells BGI to BlackRock

On Friday Barclays agreed to sell its fund management division, Barclays Global Investors (BGI), to BlackRock for £8.2bn ($13.5bn).

Barclays will keep a 20 per cent stake in the merged company, now the world's biggest money manager. The deal will be partly funded by the sale of a $2.8bn stake in the combined business to sovereign investors in the Middle East.

This financing indicates that, despite the early signs of recovery in major financial markets of the West, bumper deals still require non-bank funding to get done.

WPP financial PR outfit Buchanan Communications recently pulled out of its Middle East operation (PRWeek, 6 June), blaming the ‘nose-diving' economy and a lack of financial PR opportunities.

But a number of agency bosses spoken to by PRWeek insisted that the Middle East remained an extremely active area for financial PR, with some agencies planning further expansion.

Much of this expansion is linked to sovereign investment funds, rather than private companies looking for a UK listing. Nevertheless, agency bosses insist there remains more financial PR activity in the Middle East than in the UK on a proportional basis.

The Middle Eastern investors into BlackRock are yet to be confirmed. The FT suggested the Kuwaiti Investment Authority and the Government Investment Corporate of Singapore (GIC) are on-board. Other media outlets have said government-backed investors from Abu Dhabi and Qatar are involved.

PRWeek understands that City deal-maker Amanda Staveley is the prime mover at the heart of the BlackRock investment.

She received a flurry of media coverage when her PCP Capital Partners firm brokered the deal which saw the Abu Dhabi Royal family invest £3.5bn in Barclays in November 2008.

Staveley, through PCP International, is believed to be one of the principals behind the BlackRock deal.

Staveley is becoming synonymous with large Middle Eastern involvement in UK deals, having brokered Sheikh Mansour bin Zayed al Nahyan's purchase of Manchester City and his stake in Barclays and having lead DIC's unsuccessful bid for Liverpool.

Her presence on the deal suggests a significant portion of funding may come from sources linked to the Abu Dhabi Royal family, although the Daily Mail last week speculated that Sheikh Mansour had been unhappy at the high level of media coverage surrounding Staveley's involvement in the Barclays investment.

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