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CSFB to sell third-party fund investments

CSFB's Private Fund Group, the fund placement unit, is advising the bank on selling a substantial portion of its private equity fund interests.

(PrivateEquityCentral.net) Global financial services firm Credit Suisse First Boston is reducing its exposure to third-party private equity funds.

The firm is selling a “substantial” portion of its interests in private equity funds. Its Private Fund Group, which acts as a placement agent for third-party funds, is acting as the agent for the sale, according to a press release.

The firm will continue to invest in third-party funds through CSFB Private Equity’s Customised Fund Investment Group, which manages capital for third-party clients as a fiduciary. The Private Fund Group will also remain active in assisting funds in raising capital, according to a statement released by the firm.

The firm will also continue to invest in its own private equity funds, under the umbrella of CSFB Private Equity, which has more than $25bn in committed capital. That family of funds includes CSFB Merchant Banking Partners I-III, DLJ Investment Partners I and II, Sprout Group, DLJ Real Estate Capital Partners I and II and DLJ Strategic Partners.

The move to shrink CSFB’s exposure to third-party private equity funds comes at the same time the firm announced it will sell its real estate. The firm, which had $19bn in real estate holdings in 1999, announced it was set to reduce its exposure of real estate to $400m from $2bn after three planned sales in the coming months.

Credit Suisse First Boston has been looking for ways to improve its balance sheet and has been embroiled in a controversy regarding conflicts of interest between analysts and investment bankers.

CSFB is not the only investment bank cutting back its private equity program. Last week it emerged that JP Morgan Chase was decreasing the amount it would commit to the firm’s private equity business, JP Morgan Partners.

In May, CSFB’s distressed fund spun out of the parent organization based on a “joint recommendation.” The fund hopes to raise $2.2bn for investment in distressed opportunities.