Boston, MA 08/12/2014 (wallstreetpr) – Last year JPMorgan Chase & Co. (NYSE:JPM) announced that it would make its private equity unit an independent one, and within a year’s time, it has decided to sell it. According to reports, JPM has decided to sell 50% of $4.5 billion worth of a PE business to Lexington Partners Inc. and AlpInvest Partners BV of The Carlyle Group LP (NASDAQ:CG) in a buyout transaction. AlpInvest is a unit of Carlyle, which is based in Washington. It is the second-largest manager of investment alternatives to bonds and stocks. AlpInvest has over $52 billion worth of AUM (asset under management).
What’s Next:
As soon as the transaction gets executed completely, dealmakers at One Equity Partners LLC will form an independent investment firm which will not be regulated by JPMorgan Chase & Co. (NYSE:JPM). According to reports, the transaction is expected to get over by the end of the current year. Although financial terms and conditions of the transaction were not disclosed, but JPM said that One Equity Partners LLC will manage the rest of the portfolio.
The main reason behind this step of JPM is the requirements of WS. Reports claim that Wall Street requires firms to unload some parts of their businesses so that they can bolster capital. Nowadays companies try to make an investment with their money; hence, WS wants to stop this tradition by putting a few tight guidelines.
It is not the first time when JPMorgan Chase & Co. (NYSE:JPM) has decided to sell part of its business, in last month also the company sold $1.3 billion worth of loans and securities to Sankaty Advisors LLC, of Bain Capital LLC. A spokesperson of JPM said, “The recent sell transaction of the PE business will not have any impact on company’s earnings in future time.”
Just like JPMorgan Chase & Co. (NYSE:JPM), one other firm named Lexington that is based in New York raised around $7 billion three years back in 2011 to buy stakes in buy-out funds. It is called secondary private equity financing in financial terms.
