JPMorgan Chase & Co. (NYSE:JPM) said Friday it plans to break off its private equity unit as an independent firm.
JPMorgan Chase & Co. (NYSE:JPM)’s private equity unit, One Equity Partners, will continue to make direct investments on behalf of the New York-based bank for an interim period. One Equity Partners will still manage the bank’s existing group of portfolio companies, according to The Wall Street Journal’s report.
Brook Asset Management was up 7.27% for the first quarter, compared to the MSCI GBT TR Net World Index, which returned 3.96%. For March, the fund was up 1.1%. Q1 2021 hedge fund letters, conferences and more In his March letter to investors, which was reviewed by ValueWalk, James Hanbury of Brook said returns during Read More
One Equity Partners will raise their next fund from an external group of limited partners and become independent from JPMorgan Chase & Co. (NYSE:JPM).
Private equity was once a high profile business at JPMorgan and its predecessor, Chase Manhattan Corp. However, over the years with other divisions such as investment banking and trading gaining prominence, the private equity business has taken a back seat.
JPMorgan’s Spokeswomen Clarifies Proposed Changes
A JPMorgan Chase & Co. (NYSE:JPM)’s spokeswomen, however, clarified that the proposed changes to make the private equity unit independent weren’t a reaction to the Volcker Rule, which places limits on bank trading and investment activities. The bank has viewed the investments made by One Equity as a credit business and hence it would be outside the ambit of Volcker Rule, one of the components of the Dodd-Frank financial legislation.
The bank’s spokeswomen added the proposed change reflects the bank’s efforts to focus on client businesses and move away from proprietary activities.
The private equity unit currently manages approximately $4.5 billion of investments for JPMorgan in direct private equity transactions.
Compliments From Senior Management
JPMorgan Chase & Co. (NYSE:JPM)’s Chairman and CEO complimented One Equity Partners saying he has a lot of respect for all that the company has accomplished and the great value they have delivered to the firm. He expressed confidence that the private equity company would continue to be extremely successful.
JPMorgan’s chief operating officer Matt Zames expressed satisfaction on the One Equity team’s strong returns over the years, besides helping grow some great companies. He felt the time is right for private equity unit to seek new capital to strengthen their global strategy, as they continue to manage the Bank’s existing portfolio to maximize value to the firm.
One Equity Partners (OEP) partners with management teams and makes investments to help businesses grow, often through combinations. OEP acts as a lead investor both as majority and minority owner in acquisitions and growth capital financing.
One Equity’s investments typically range from $50 million to $250 million per transaction. The firm has investments in North America, Europe, Asia, and South America.
OEP has produced strong results over the last twelve years.
One Equity currently manages investments in medium-sized companies such as Brazil’s Allied Advanced Technologies and California-based Chemlogics Group.