BlackRock working out $13.5 billion deal for BGI, Barclays’ investment division

Barclays, BlackRock

The world's biggest asset manager appears to be in the making - with New York-based BlackRock Inc. announcing on Thursday that it is working out a $13.5 billion blockbuster deal for Europe's biggest hedge fund manager BGI, which is the investment division of the British bank Barclays Plc!

In case the BGI deal comes through, the assets of Blackrock, which has been in operation for 21 years, will increase two-fold to approximately $2.7 trillion - with the inclusion of the nearly $1.5 trillion in assets of BGI, most of them being in funds whose holdings are established by the indexes they are designed to take off.

The BGI deal will also provide BlackRock with an access to retail investors and the enormously popular exchange traded funds offered by the San Francisco-based Barclays Global Investors. Moreover, with BGI operational in 15 countries, the deal will not only spread out BlackRock's global reach, but also extend its renowned fixed- income investing operations to new products across actively and passively managed portfolios.

Meanwhile, for Barclays the BGI-BlackRock deal will fortify its balance sheet, particularly after the bank refused financial aid from the British government, in the face of the economic downturn.

Commenting on the prospective deal, Geoff Bobroff, president of Bobroff Consulting Inc., said: "There has never been a marriage of this scale between managers with differing investing styles."