With at least one deal already on the table to sell its exchange-traded funds business, iShares, Barclays plc is now negotiating the sale of its entire fund management operation, according to press reports earlier today.

In its morning edition, the Financial Times reported that Barclays Plc (NYSE: BCS) has opened talks with different asset managers to sell BGI. The article listed one of those parties involved as U.S. money manager BlackRock Inc. (NYSE: BLK). And, according to unnamed sources, the sale price for BGI is around $10 billion. 

Bloomberg News also reported that a deal could be in the works. It listed Bank of New York Mellon Corp. (NYSE: BK) as another large asset manager interested in buying BGI, which has about $1.6 trillion in assets under management. The story also named BlackRock as a potential bidder, noting that the firm is the largest public asset manager in the U.S., with around $1.3 trillion in assets under management. 

Barclays confirmed in a press release this afternoon in London that it had received a number of expressions of interest for iShares, but also unsolicited bids for the whole of Barclays Global Investors (BGI).

If it goes ahead, the sale of BGI would represent a substantial shift from Barclays' initial intention to sell only the iShares exchange-traded fund business to private equity firm CVC Capital Partners, for US$4.2 billion.

Under the terms of the CVC deal, Barclays retained a "go-shop" provision to seek alternative bidders until June 18. Barclays will pay a break fee of US$175 million to CVC if it chooses another bidder, as now seems likely.

The sale of the whole of Barclays' fund business would result in multi-million payouts to key employees. A regulatory filing by Barclays on 9 April to the London Stock Exchange confirmed that Barclays Global Investors staff control up to 10.3% of the fund manager's share capital under an equity ownership plan.  A US$10 billion sale price for the firm will therefore represent a windfall of over US$1 billion for the plan members. 

According to Bloomberg, a US$10 billion sale price would constitute a record for the fund management industry, eclipsing the US$8.5 billion takeover of Merrill Lynch's fund business by Blackrock in 2006.

The reported bidders for BGI, BNY Mellon and Blackrock, could both derive synergies from a purchase.

BNY Mellon already has a significant ETF market presence, but primarily as a service provider, offering global custody, trustee services, fund accounting and fund administration.  BNY Mellon is also a major participant in the securities lending business.  For Barclays, securities lending revenues, including those derived from the iShares exchange-traded fund business, contributed profit of £389 million last year.

Blackrock has previously expressed interest in entering the exchange-traded fund business, but only as a provider of actively-managed ETFs. However, a merger of Blackrock and BGI would create the world's largest asset manager and marry the former firm's expertise in active management with BGI's passive fund business.

Earlier this week, IndexUniverse.com reported that BGI was planning a major move with its ETF product lines. The San Francisco-based iShares unit, which had grown to a dominant position in the industry through passive index-based ETFs, has filed to launch actively managed ETFs. (See related story here.)

In early afternoon New York trading on Friday Barclays ADRs were quoted at US$15.78, down 0.75% on the previous day's close, retracing an initial jump on Friday of over 5%. Blackrock shares were quoted at US$142.68, up 1.9%, and BNY Mellon's shares were trading at US$27.66, down 2.78%.