JP Morgan Chase’s Private Equity Business Sale Hits Impasse

According to three people familiar with the matter, the sale of One Equity Partners, a JP Morgan Chase’s private equity unit, has hit an impasse.

Two people close to potential buyers said the bank “pulled” the business off the market. Another source, active in the secondary market but not directly involved with the process, described the auction as stalled after the bank increased its asking price.

“The bid/ask spread has widened dramatically,” the secondary professional said. “It’s hard to imagine someone stretching to that level. There’s a lot of disappointed buyers.”

Sources said the bank could revive an auction of One Equity at any time. “The question is, do they try and come back six months from now, or never?” one source said.

A spokesperson for JP Morgan Chase declined to comment.

The bank announced last July it was spinning off One Equity, its last remaining private equity operation, because the unit was not core. JP Morgan Chase was not under regulatory pressure to sell: One Equity would not be affected by the Dodd-Frank financial reform law, which restricts the ability of bank holding companies to own and operate private equity groups, sister news service Reuters reported last year.

Source: Reuters

 

Tags: Private Equity, Private Equity Firm, Private Equity Group, Private Equity Company, Private Equity Fund, Private Equity Investment, Private Equity Investor, Fund of Fund, Private Equity Business, Private Equity Industry, PE, One Equity Partners, JP Morgan Chase, Dodd-Frank.


Lazard Searches for Bidders to Acquire Investor Stakes in CVCI

After Citigroup sold the business to emerging markets investor The Rohatyn Group in December, the investment bank Lazard is searching for bidders to acquire investor stakes in Citi Venture Capital International (CVCI).

The sale came amid pressure to offload non-core investment activities due to Dodd-Frank regulation in the US, which aims to curb high-risk investment activity among financial institutions.

Rohatyn has hired Lazard in an effort to provide liquidity to investors in CVCI’s old funds, with a buyer of these fund interests likely to provide seed capital for the CVCI team to invest in new deals, according to a person familiar with the matter. A person close to the process said the deal would work “in concert” to provide CVCI investors with liquidity and the emerging markets manager with new funds.

Two people familiar with the matter said a buyer would likely pay up to $1 billion for the fund interests and seed capital.

A person with knowledge of the situation said other investors in old CVCI funds would be given first option on the sale of their investor stakes in the funds before Citi is able to cash out. The transaction is subject to whether other investors in CVCI funds want to cash out their stakes, the person said.

Source: Financial News

 

Tags: Venture Capital, Venture Capital firm, Venture Capital group, Venture Capital industry, Venture Capital investment, Venture Capital Investor, Venture Capital fund, VC Funding, VC, Citigroup, The Rohatyn Group, Investment Bank, Lazard, Citi Venture Capital International, CVCI, Dodd-Frank, US, Seed Capital, Seed Funding.


Secured Loans by Volcker Rule

Volcker Rule on December 10, 2013, the various regulators with jurisdiction over the banking industry finally adopted the new rule, helping lenders engaged in the typical hedge fund or private equity secured loan do not want to own the fund interest.

Loans secured by interests in hedge funds and, to a lesser extent, private equity funds have been a staple of many banks’ credit offerings for years. However, the Dodd-Frank Wall Street Reform and Consumer Protection Act (Pub. L. 111-203, H.R. 4173) (“Dodd-Frank”) in general, and the part thereof known as “the Volcker Rule” in particular, have raised a basic question: “Can a banking institution subject to the Volcker Rule (which is virtually every banking institution in the U.S.) continue to make and enforce hedge fund and private equity fund secured loans?”

On December 10, 2013, the various regulators with jurisdiction over the banking industry (the “Agencies”) finally adopted the Volcker Rule, 1 which is the portion of Dodd- Frank intended to prevent banks from engaging in proprietary trading in “covered funds”.2 In addition to the ban on proprietary trading, the Volcker Rule severely restricts banks’ ownership in covered funds and certain transactions with affiliated covered funds.

Source: Lexology

 

Tags: Hedge Fund of Funds Business, Hedge Fund, Hedge Funds, Fund of Hedge Funds, Hedge Fund of Funds, Hedge Fund industry, Hedge Fund Group, Hedge Fund Market, Hedge Fund Investments, Hedge Fund Advisory Firm, Hedge Fund Returns, Volcker Rule, Banking Industry, Private Equity, Private Equity Secured Loan, Dodd-Frank Wall Street Reform, Consumer Protection Act, Dodd-Frank, US.


The House Approves Bill to Ease Private Equity Funds from Rules

One of the two houses of the United States Congress, The House, approved a bill that would largely spare private equity fund advisers from federal regulations.

The House approved a bill on Wednesday that would exempt many investment advisers to private-equity funds from oversight by the Securities and Exchange Commission.

The Republican-led chamber passed legislation, 254-159, that removes the SEC registration requirement for funds that have not borrowed money and do not have outstanding principal that exceeds their invested capital by two times.

The measure is aimed at a provision of the Dodd-Frank financial reform law that compels private funds with more than $150 million in assets under management to register with the SEC.

The White House has threatened to veto the bill. Senate Democrats, who hold the majority in that chamber, have not expressed any interest in legislation that would undo parts of the financial reform law.

Source: InvestmentNews

 

Tags: Private Equity, Private Equity firm, Private Equity group, Private Equity Company, Private Equity Fund, Private Equity investment, Private Equity investor, Fund of Fund, Private Equity business, Private Equity industry, PE, United States Congress, The House, Federal Regulations, SEC, Securities and Exchange Commission, Dodd-Frank, The White House, Senate Democrats.


Timothy Geithner Lands in Warburg Pincus LLC

An American economic policy maker and central banker Timothy Geithner will join Warburg Pincus LLC, a global private equity firm with offices in the United States, Europe, Brazil, China and India.

Mr. Geithner, who has spent most of his career outside the private sector, said in an interview he plans to start in March at the New York-based firm, known for its role in buyouts of companies including eye-care firm Bausch & Lomb Inc., luxury retailer Neiman Marcus Group Inc. and stadium concessionaire Aramark Corp.

Mr. Geithner has been credited with helping to slow the momentum of the financial crisis in 2008 and 2009, but also has been criticized as too soft on Wall Street banks at the time. He has said he did what he felt was best for the economy and financial markets, and that he views the 2010 Dodd Frank financial law, in which he had a strong hand, as an antidote to risk-taking on Wall Street.

At Warburg, he will serve as president and managing director, not the kind of figurehead or advisory positions that public-sector figures often land after government stints. Mr. Geithner, 52 years old, is expected to work on mapping the firm’s strategy and management, investor relations and on matters related to the firm’s investments.

Source: Wall Street Journal

 

Tags: Private Equity, Private Equity firm, Private Equity group, Private Equity Company, Private Equity Fund, Private Equity investment, Private Equity investor, Fund of Fund, Private Equity business, Private Equity industry, PE, United States Private Equity, Europe Private Equity, Brazil Private Equity, China Private Equity, India Private Equity, US Private Equity, Timothy Geithner, Warburg Pincus LLC, Bausch & Lomb Inc., Luxury Retailer, Neiman Marcus Group Inc., Stadium Concessionaire, Aramark Corp, Wall Street Banks, Dodd Frank.


Hedge Funds and Private Equity Keep on Blooming

Hedge funds and private equity funds are doing so well after five years after the collapse of Lehman Brothers, a global financial services firm, and two years after the Occupy Wall Street protests explosion in Zuccotti Square.

This was not a foregone conclusion during the darkest days of fall 2008. Many critics were more than eager to write their obituaries, dismissing these alternative funds as simply a byproduct of the excesses that plagued an era now clearly drawing to an end. In the cold light of day, hedge funds and private equity funds would be revealed as the financial flim-flam artists that many doubters assumed them to be.

Except, instead of being relegated to the dustbin of history, alternative funds have survived and thrived over the past five years. Despite intense focus on them in the aftermath of the financial crisis and then again during the most recent US presidential election, hedge funds and private equity funds are still active participants in the modern financial markets. Even the extensive regulations introduced by Dodd-Frank reforms, which was one of the few key legislative successes of President Obama’s first term, did not succeed in preventing their return to form. They are, indeed, now global phenomenon. Source

 

Tags: Hedge Fund of Funds Business, Hedge Fund, Hedge Funds, Fund of Hedge Funds, Hedge Fund of Funds, Hedge Fund industry, Hedge Fund Group, Hedge Fund Market, Lehman Brothers, Occupy Wall Street, Zuccotti Square, Hedge Funds and Private Equity Funds, Private Equity, Private Equity firm, Private Equity group, Private Equity Company, Private Equity fund, Private Equity investment, Private Equity investor, Fund of Fund, Private Equity business, Private Equity industry, PE, Dodd-Frank, President Obama, American President, Barack Obama.


House Republicans Declare SEC’s Regulation of Private Investments Threatens to Reduce its Oversight of RIAs

Two key Republicans in the U.S. House of Representatives are questioning whether regulation of private investment funds threatens to reduce its oversight of registered investment advisers.

Under the Dodd-Frank financial reform law, the SEC has taken on about 1,500 additional advisers to private-equity and hedge funds. The Dodd-Frank measure requires that private funds with more than $150 million in assets under management register with the SEC so that the agency can better monitor any systemic risk the funds pose to the financial system.

Private funds must file a so-called Form PF that provides details about their funds’ trading practices and leverage. The SEC also has launched so-called “presence exams” that are targeted at high-risk areas of private-fund operations.

In a Sept. 12 letter to SEC Chairman Mary Jo White, two leading Republicans overseeing the agency asserted that it is reviewing private funds to strengthen protection of their investors — who must meet certain high income and asset thresholds to buy shares — rather than to determine systemic risk.

“The attention the SEC has paid to enhancing the regulatory scrutiny afforded to sophisticated investors suggests that the SEC has prioritized the protection of ‘millionaire and billionaire’ investors over ‘mom and pop’ investors,” wrote Rep. Jeb Hensarling, R-Tex., and Rep. Scott Garrett, R-N.J. Mr. Hensarling is the chairman of the House Financial Services Committee. Mr. Garrett is chairman of the panel’s Capital Markets Subcommittee. Source

 

Tags: Private Equity, Private Equity firm, Private Equity group, Private Equity Company, Private Equity fund, Private Equity investment, Private Equity investor, Fund of Fund, Private Equity business, Private Equity industry, PE, U.S. House of Representatives, Dodd-Frank, SEC, Hedge Funds, Fund of Hedge Funds, Hedge Fund Industry, Mary Jo White, Republicans, Jeb Hensarling, R-Tex., Scott Garrett, R-N.J., House Financial Services Committee, Capital Markets Subcommittee.


Blackstone Acquires Credit Suisse Fund-of-Fund

Blackstone has acquired Credit Suisse’s strategic partners business, a secondary private fund-of-funds business, with $10 billion in assets under management.

Credit Suisse agreed to sell the unit in April. It is thought the sale is a move to boost the Swiss bank’s balance sheet. In the summer of 2012, the bank released its divestment plans and revealed it was exploring the option of a sale as Dodd-Frank regulations look set to limit bank investments in private equity funds.

The Strategic Partners business seeks capital appreciation through the purchase of secondary interests in high quality private equity, real estate and venture capital funds from investors seeking liquidity on a fair, timely and confidential basis. From its start in 2000, it has raised over $11bn of capital commitments, completed over 700 transactions, and acquired over 1,500 underlying limited partnership interests.

Strategic Partners’ funds have produced top quartile private equity returns. Strategic Partners’ team of twenty-nine dedicated secondary investment professionals is headed by Stephen Can and Verdun Perry. Source

 

Tags: Private Equity, Private Equity fund, Fund of Private Equity Funds, Private Equity Fund of Funds, Fund-of-Fund, Blackstone, The Blackstone Group L.P., Credit Suisse, Swiss bank, Dodd-Frank, The Strategic Partners, Real Estate, Real Estate funds, Venture Capital, Venture Capital funds, Stephen, Verdun Perry.


SEC Eyes Private Equity Firms

The Dodd-Frank Financial Reform Act required the Securities and Exchange Commission, or the SEC, to implement enhanced regulatory rules. As a result, private equity firms are now being scrutinized at a new level. Dodd-Frank, passed in 2010, revised the bar for firms to register as investment advisers, lowering the minimum regulatory threshold for assets under management (aum) to $150 million.

The SEC’s Asset Management Unit is on the lookout for aberrational returns, using quantitative data to “ferret out cases and violations,” David Kornblau, a partner at Covington & Burling LLP, said during a recent webinar. Mr. Kornblau said the SEC is also taking a look at so-called “zombie funds,” which may be holding on to a few assets without the possibility of raising another fund. The agency is concerned that those managers might be maximizing their own revenue, whether by misrepresenting the value of the companies or charging “unusual fees.” Source

The SEC has already fined Oppenheimer & Co. for allegedly supplying investors with misleading quarterly reports and has announced it intends to review about 4,000 registered private fund advisors in a two year period. Among other areas, the governmental organization will investigate conflicts of interest related to compensation and issues surrounding marketing and performance advertising.

 

Tags: Securities and Exchange Commission, SEC, Private Equity, Dodd-Frank, Financial Reform Act, Regulation,


Wilson Holding Company



Platinum Members Log-in

Log-in to your Platinum Membership.