Barclays sells index business to Bloomberg for $787 mn
17 Dec 2015
British banking giant Barclays Plc yesterday agreed to sell its index solutions business to US-based Bloomberg LP, a leading financial news and market data provider, for approximately £520 million ($787 million) in cash as part of its strategy of divesting non-core assets.
The deal brings an end to Barclays' long-running effort to sell the index business and follows the disposal of its under-performing retail banking network in Italy earlier this month to Chebanca, a unit of Italian lender Mediobanca SpA, at a $259-million loss on account of the unit's liabilities.
Barclays' index bench-marking includes its various financial market indices, risk analytics and tools for portfolio construction and analysis. The bank acquired the business along with certain other assets of the collapsed US investment bank Lehman Brothers during the global financial crisis in 2008.
''The transaction includes the sale of relevant intellectual property in relation to the point portfolio analytics too,'' Barclays said in its statement.
Barclays Group CEO Jes Staley, who took the reins recently, said, ''We are pleased to partner closely with Bloomberg upon completion of the transaction, , including maintaining a co-branding arrangement on the benchmark indices for an initial term of five years.''
''At a time when market structure change is causing increased demand for innovative solutions in fixed income, the industry and our mutual clients will benefit greatly from the combination of these assets,'' said JP Zammitt, global head of financial products at Bloomberg.
Barclays would retain its quantitative investment strategy index business, but would outsource calculation and maintenance of those indexes to Bloomberg.
New York-based Bloomberg, founded in 1981, is a privately-held financial software, data, and media company. It has 192 offices across the globe and the company's annual revenue is around $9 billion.
Michael Bloomberg, founder of Bloomberg and former New York mayor said, ''As financial markets continue to evolve, our clients need and expect the index business to evolve, too.''
''Combining the market-leading Barclays indices and their superb team with our data management, analytics and distribution will provide more independence, liquidity and transparency to the marketplace, improve industry innovation and further meet the diverse needs of our global client base,'' he added.
The transaction is expected to close in mid-2016, subject to regulatory approval.
The deal will generate a pretax gain of about £480 million, Barclays said.
''This transaction is further evidence of the good work we are doing in managing down our Non-Core assets so that shareholders can feel the full benefit of ownership of Barclays' well-performing Core businesses,'' Stanley said.
Barclays index benchmarking business attracted bids from a number of suitors, among them Bloomberg, S&P Dow Jones and Markit emerged front runners for the purchase.
