JPMorgan spinning off PE unit; Lexington, AlpInvest to pick 50% of portfolio

Global financial services firm JPMorgan Chase & Co has decided to spin off its principal private equity unit One Equity Partners (OEP) through a deal with Lexington Partners Inc and Carlyle Group LP’s AlpInvest Partners BV, according to a statement.

JPMorgan has signed a definitive agreement with Lexington Partners and AlpInvest Partners to sell approximately 50 per cent of the portfolio companies, which are currently held by the company’s buyout arm OEP, the statement said.

The financial details of the transaction are not disclosed by the company. The deal is expected to be completed by the year-end.

Once the deal is completed, OEP professionals, led by its founder and chief Dick Cashin, will float a new PE investment advisory firm named OEP Capital Advisors LP (OEPCA). The firm will operate independently and will manage the portfolio being divested by JPMorgan Chase, along with the investments being retained by JPMorgan.

“Lexington is pleased to partner with One Equity Partners to acquire a significant portion of JPMorgan Chase's interests, and to support the future investment activities of the OEP team,” Brent Nicklas, managing partner of Lexington Partners, said.

JPMorgan had announced in July last year that it will spin off OEP, which shall raise its next fund as an independent outfit.

While large banks have been gradually pulling out of PE business as part of the regulatory norms implemented in the US with Volcker Rule after the financial crisis, in some cases banks have said their decision to spin off their captive PE unit is to avoid conflict of interest with other PE firms who are their clients.

OEP does not have presence in India. In Asia it has offices in Hong Kong and Tokyo.

(Edited by Joby Puthuparampil Johnson)

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