What does Barclays' $13.5bn deal mean for investors?

Barclays' has sold its fund management arm to US firm BlackRock. But at what cost - and what does it mean for investors? John Stepek explains.

You have to hand it to Barclays. The bank has consistently managed to claw its way out of trouble all the way through this financial crisis. But at what cost?

The latest great escape came after US fund manager BlackRock agreed to buy Barclays Global Investors (the bank's fund management arm) for $13.5bn. The deal will create the biggest asset manager in the world, more than twice the size of its nearest rival. BlackRock is paying $6.6bn plus 37.8m shares, giving Barclays a stake of roughly 20% in BlackRock. Singaporean and Kuwaiti sovereign wealth funds are coughing up $2.8bn of the $6.6bn, while BlackRock is also borrowing $2bn from Barclays to fund the deal.

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John Stepek

John Stepek is a senior reporter at Bloomberg News and a former editor of MoneyWeek magazine. He graduated from Strathclyde University with a degree in psychology in 1996 and has always been fascinated by the gap between the way the market works in theory and the way it works in practice, and by how our deep-rooted instincts work against our best interests as investors.

He started out in journalism by writing articles about the specific business challenges facing family firms. In 2003, he took a job on the finance desk of Teletext, where he spent two years covering the markets and breaking financial news.

His work has been published in Families in Business, Shares magazine, Spear's Magazine, The Sunday Times, and The Spectator among others. He has also appeared as an expert commentator on BBC Radio 4's Today programme, BBC Radio Scotland, Newsnight, Daily Politics and Bloomberg. His first book, on contrarian investing, The Sceptical Investor, was released in March 2019. You can follow John on Twitter at @john_stepek.