JPMorgan to Spin Off Private Equity Fund
{{#rendered}} {{/rendered}}JPMorgan Chase & Co. (JPM) said on Tuesday it will spin off its $13 billion private equity fund, but will keep a similar unit recently acquired in its merger with Bank One Corp.
The spin-off, which comes amid a trend of bank spin-offs of private equity funds, is expected to take some volatility out of the bank's earnings while decreasing competition between the bank and large customers when making investments.
The No. 2 U.S. bank said its private equity unit, JPMorgan Partners LLC (JPMP), will become an independent partnership when it completes the investment of its current $6.5 billion Global Fund. JPMP will manage the Global Fund and existing JPMorgan Partners investments.
{{#rendered}} {{/rendered}}As an independent entity, the partners in the fund will have ownership stakes, as is typical in most private equity firms.
The bank will invest 24.9 percent, or up to $1 billion, in the new fund that the firm plans to raise as a successor to the current Global Fund. Because its stake will be less than 25 percent, it will be classified as a passive partner.
JPMorgan Partners Asia will continue to raise money for a second fund and will be associated with the new independent private equity firm.
{{#rendered}} {{/rendered}}Once fund-raising for the Global Fund is complete, One Equity Partners will become the sole private equity investment vehicle for JPMorgan Chase & Co.
JPMorgan took over One Equity Partners after it completed its $58 billion purchase of Bank One in July 2004.
JPMP had approximately $13 billion in capital under management as of Dec. 31. JPMP has invested more than $15 billion in consumer, media, energy, industrial, financial services and health-care companies.