Exclusive: Barclays weighs index unit sale after MSCI approach - sources
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NEW YORK
A logo hangs outside a branch of Barclays bank in London July 30, 2013.
Credit: Reuters/Toby Melville
NEW YORK (Reuters) – Barclays Plc (BARC.L) is exploring options for its index business after equity index provider MSCI Inc (MSCI.N) approached the British bank recently about buying the unit, according to several people familiar with the situation.
MSCI’s approach has spurred early-stage discussions at Barclays, and it has not yet decided whether it should sell the Barclays Indices platform, which includes well-known products like the Barclays U.S. Aggregate Bond Index, which tracks assets with a market value of $ 16.7 trillion, the sources said.
All of the sources wished to remain anonymous because they are not permitted to speak to the media.
It could not be determined how much Barclays would get if it decides to sell the unit or how much MSCI has offered.
Barclays declined to comment. An MSCI spokeswoman was not able to provide comment immediately.
Barclays lists 88 major indices on its website, but the bank offers thousands of benchmarks and indices, many of which it creates for clients.
Almost $ 2.3 trillion in exchange-traded product and mutual funds track Barclays indexes, making it the second-biggest index provider after Standard & Poor’s, according to Lipper. That does not include other pools of assets that track the indices, like institutional separate accounts and collective trusts.
The U.S. Aggregate Bond Index, which Barclays bought as part of the Lehman Brothers acquisition during the financial crisis, is among the platform’s best-known offerings. With investors pouring money into fixed income, passively managed exchange-traded funds and mutual funds, Barclays could get a good premium if it decides to sell the business, industry experts said.
Since January of 2008, investors have poured $ 1.2 trillion into fixed income mutual funds and ETFs, according to Lipper.
“If you listen to the exchange-traded fund managers, they all say that fixed income is their area of focus,” said Deborah Fuhr, founding partner of ETGI, a London-based ETF consultant and research firm.
One executive at a large provider of index funds and ETFs said that their firm is always asking index providers to expand their fixed-income offerings.
“I have suggested to each and every one of them to broaden their business to fixed income,” said the executive. “MSCI would be a natural buyer for that business since they need more fixed income.”
(Reporting by Jessica Toonkel and Soyoung Kim; Editing by Leslie Adler and Nick Zieminski)
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