Barclays Global Investors will sell global exchange traded funds (ETFs) provider iShares for £3 billion, or $6.2 billion, to private equity firm CVC Capital Partners.
Barclays will retain a 20 per cent share in the company through warrants. The sale does not include the securities lending business, according to British media.
Earlier this month, market participants expected the company to raise as much as £4 billion, $8.3 billion, in the sale, but this was for the entire business.
The purchase of iShares gives CVC instantaneous brand and market share leadership in this rapidly growing sector.
IShares was one of the first companies to enter this space in the 1990s, and is now the largest provider of ETFs in the world.
In Australia, where iShares has an office in Sydney, the company offers about 20 Australian Securities Exchange-listed ETFs, many of which track US indices.
Although private equity firms are often accused of turning companies into skin-and-bone operations, it is unlikely this will happen to iShares, Lonsec analyst Michael Elsworth said.
"They are not buying it to change the way it's done, because it's such a success," Elsworth said. "I think the motivation is that they are getting it at a good price, because Barclays is struggling at the moment."
Although Barclays is one of the few British banks to have remained profitable during the financial crisis, it has been searching for ways to improve its capital position in an attempt to avoid having to accept Government hand-outs.
