Barclays to sell asset management firm iShares

Barclays said Thursday that it had agreed to sell its U.S.-based asset management business IShares to European equity firm CVC Capital Partners Group, booking a net gain of $2.2 billion.

IShares, the world’s biggest manager of exchange-traded funds, is part of San-Francisco-based Barclays Global Investment. It accounts for more than half of that unit’s profits despite managing less than a quarter of the operation’s assets.

Barclays will finance $3.1 billion of the $4.4-billion purchase price and will be entitled to receive 20% of the equity return from IShares once CVC has achieved certain minimum returns.

The sale will boost Barclays’ capital after it turned down a place in the British government’s program to insure so-called toxic assets, choosing to avoid state influence in its business.

CVC Capital is putting up just $1.05 billion of the purchase price by providing the equity for the deal. Barclays has agreed to keep the majority of the debt on its books for five years.