Bear Stearns Private Equity, a London-listed fund of funds, is pressing ahead with a share issue to increase its purchasing power despite the fire sale of Bear Stearns, home to the fund's management team, to JPMorgan Chase.
A source close to the fundraising said the banks JPMorgan Cazenove, Natixis and HSBC, which are running the placement, are confident it will be a success when it closes at the end of April. The fund it targetting between $250 million (€158 million) and $350 million, which it is planning to price at a premium to net asset value to cover the cost of the placement. It intends to price the offer on 18 April.
He said: “The fund is not owned by Bear Stearns. There is no material reason not to progress the placement.”
Bear Stearns Private Equity, which at $504 million has a market capitalisation of more than twice the $230 million paid by JPMorgan for the beleaguered bank, was at pains yesterday to spell out its independence and the security of its assets.
In a statement it told shareholders: “Bear Stearns Private Equity (BSPEL) is a separate legal entity controlled by an independent board of directors, three out of four of whom are independent from the investment manager. BSPEL’s investment manager is Bear Stearns Asset Management, a subsidiary of Bear Stearns Companies. BSPEL is not a subsidiary of Bear Stearns Asset Management.”
BSPEL said its administrator, HSBC Management, is holding in safe custody over 99 percent of the company's $504 million in investments and cash. The remaining less than 1 percent of its cash and cash equivalents are held by The Bear Stearns Companies and its subsidiaries in BSPEL accounts. JPMorgan Chase has agreed to guarantee all client accounts held by Bear Stearns Companies.
Bear Stearns Companies yesterday agreed to be sold to JPMorgan Chase for the fire-sale price of $2 a share in stock.
Separately Macquarie Private Capital, a quoted Australian fund of funds, moved to reassure shareholders. It said it expected a $115.5 million takeover bid from Bear Stearns Private Equity to continue, despite the buyout of Bear Stearns.
Macquarie Private Capital, which is 48 percent owned by the Australian bank Macquarie, recommended the $1.062 a security offer to shareholders last month.
Macquarie Private Capital said the Bear Stearns fund proposal was on track with the time table of the bid. Macquarie Private also highlighted Bear Stearns Private Equity's status as a separate legal entity controlled by an independent board of directors.
The Australian group said the deal was still subject to conditions including security holder and court approvals.