[Editor's note: The following was submitted by IndexUniverse.com's Murray Coleman in San Francisco and IndexUniverse.eu's Paul Amery in London.]

The recently announced $4.4 billion deal by San Francisco-based Barclays Global Investors to sell its exchange-traded funds business to private equity manager CVC Capital Partners could be in jeopardy. 

Reports surfaced in London on Sunday that at least three new bids have surfaced. The Daily Telegraph is naming private equity groups Apax, BC Partners and Hellman & Friedman as parties expressing an interest in bidding more for iShares than the original terms offered by CVC Capital.

A report by the Sunday Times of London also listed BC Partners. In fact, the paper says that the firm is now willing to pay $5.3 billion for the ETF market's dominant provider. That would be closer to earlier estimates of what BGI's parent, Barclays Plc, wanted to gain from giving up its highly profitable iShares unit. 

A Barclays spokesman later in the day told journalists that it was too early to decide if any new offers have enough substance to turn into anything concrete. But he added that there had been "tremendous" interest in iShares from "both strategic and private equity" since the initial deal was made public on April 9, according to a Reuters article.

While the CVC agreement remains largely a done deal, there are caveats in the original terms that allow Barclays to shop for a better partner. Barclays has a 45-day window, which is set to expire on June 18, to look for alternative and superior offers. If Barclays finds a better offer, it will pay a $175 million breakup fee to CVC Capital. (See related story here.)

Barclays is financing the bulk of the CVC deal, providing loans on reasonably favorable terms for $3.1 billion of the $4.4 billion deal. So besides upping the ante in terms of the sales price, new bids could involve either better financing terms or less money to be thrown into the pot by Barclays itself. 

Wiggle Room Windfall?

Even a little wiggle room either way could provide a huge incentive for Barclays' executives. The company's management would retain up to a 10% stake in iShares and be paid a cash dividend as part of the CVC deal. Barclays CEO Robert Diamond Jr. was expected to earn $6.9 million from the agreement.

The iShares business itself earned approximately $440 million in EBITDA profits in 2008 on revenues of more than $900 million. The value of the CVC agreement, according to BGI, is around a multiple of 10.1 times 2008 EBITDA.

The Telegraph story noted that a bidding war for iShares—about one-fifth of BGI's total business—should benefit shareholders of parent Barclays Plc. It added: "A higher bid will also increase the average windfall for the 200 staff with stakes in iShares ..."

On the day of the CVC deal's announcement, the current chief executive of BGI's iShares operations told IndexUniverse that the company was well-prepared to go it alone, both in terms of finances as well as resources (see related story here).

But any new deal could also alter the status of CEO Lee Kranefuss. As reported shortly after the CVC pact was signed, he would be bumped up to chairman, with iShares being run on a day-to-day basis by co-CEOs (see related story here).

None of the overseas reports offered any hints on whether talks with more potential suitors addressed management of iShares going forward. 

In the Sunday Times, reporter Matthew Goodman observed that renewed bidding for iShares could bring even more offers—perhaps from larger financial giants such as Charles Schwab & Co. He also pointed out that suitors who lost out in the initial auction, such as Bain Capital and Colony Capital, could decide not to jump back into the contest.

Interestingly, if such reports prove correct, Hellman & Friedman would fall into that category. They were a finalist in the bidding that appeared concluded in April. Earlier reports also listed Apax as a suitor, although that was never confirmed when negotiations moved into its final stages and CVC became the apparent winner.