BlackRock Inc. is likely to win the bidding for Bank of America Corp.'s money management arm, Columbia Management, unless the New York-based fixed-income giant sets its sights on Barclays Global Investors instead.
Several bankers, who declined to be named, said BlackRock should be seen as having the inside track among the list of strategic buyers — including Ameriprise Trust Co., BNY Mellon Asset Management, Federated Investors Inc., Invesco Ltd. and OppenheimerFunds — that they say have made preliminary bids for Columbia.
But the firm is also seen as a prime contender in the ongoing bidding for BGI, Barclays PLC's giant San Francisco-based quant shop, and the belle of the ball among the numerous money management subsidiaries being shopped now by capital-starved banks and insurers.
Bankers say it's unlikely that BlackRock could digest both BGI and Columbia.
While any number of buyers would covet a cohesive, stand-alone manager such as BGI if they could somehow finance a price tag pegged at $10 billion or more, bankers say properties such as Columbia and Delaware Investments, the money management arm of Philadelphia-based insurer Lincoln Financial Corp., present greater challenges for buyers looking to extract them from their financial conglomerates.
So far, those units have attracted tepid bids. A number of bankers said bids for Columbia have come in at less than $2 billion — more than $1 billion below what Bank of America officials had been hoping to garner.
With that less-than-enthusiastic reception, BlackRock could be the buyer of choice for Columbia. Bank of America, which obtained a roughly 50% economic stake in BlackRock late last year when it acquired Merrill Lynch & Co., could sell Columbia at a “low” price and still benefit from the fillip the bargain would provide for BlackRock's stock price through increased earnings forecasts, some bankers said.
Such an arrangement, however, wouldn't necessarily meet Bank of America's immediate goal of raising as much cash as possible to meet the $34 billion gap in the bank's tier 1 capital — by far the most needed by any major U.S. financial institution — identified by the U.S. government's recently announced “stress tests.”
Executives or spokesmen from all of those money managers declined to comment, as did a Bank of America spokesman.