JP Morgan Chase today announced senior management changes which place David Coulter, the new chairman of investment banking, between overall chairman and chief executive officer William Harrison and the respective heads of the financial institution’s two private equity arms, Jeff Walker and Richard Cashin.
Walker, the head of JP Morgan Partners, will report to Coulter, as will Cashin, the head of One Equity Partners, the private equity division of Bank One, which is being acquired by JP Morgan Chase for $58 billion (€47 billion).
Upon the initial announcement of the merger, there was speculation in the market as to how the two major private equity firms would be folded together, if at all. JP Morgan Partners has roughly $6.5 billion at its disposal for investments and 133 professionals around the world. One Equity has 27 investment professionals and a commitment from its parent company of roughly $500 million per year, according to a source. JP Morgan Partners has been investing under different corporate umbrellas since 1984, when it was co-founded by Walker as a division of Chemical Bank. The firm has interests in roughly 700 portfolio companies. One Equity, by contrast, was founded in 2001 and has 10 portfolio companies.
Both JP Morgan Chase and Bank One have sought to reduce their respective exposures to third-party fund interests, but have remained supportive of direct investment programmes.
The most recent announcement regarding these two private equity arms is an evolution from what was originally set forth when the merger was announced. A January 14 press release describing the merger listed Walker as a member of the combined executive committee with responsibility for private equity. Cashin was not mentioned.
“A number of people called me to say, ‘Where is Cashin’s name?’” says a former Bank One professional familiar with the private equity programme. “They believed he got traded away.”
The former Bank One professional says he sees the most recent announcement as proof of Cashin’s ‘resurrection.’
“This is Easter Sunday for Dick Cashin,” he adds.
Coulter was previously vice chairman of JP Morgan Chase and chief executive officer of its investment bank.
A spokesperson for JP Morgan Chase said Walker will remain head of JP Morgan Partners as well as a vice chairman of the overall company.
Senior management of JP Morgan Chase has not made a decision about the possible linking of JP Morgan Partners and One Equity Partners, according to a source. For now, the financial giant will house two distinct private equity firms.
The merger is expected to be finalised in June.
Previous to the most recent announcement, Walker, along with many other senior JP Morgan Chase executives, reported directly to Harrison. Harrison has long been a crucial supporter of his bank’s direct equity investment programme, and of Walker, according to sources.
Bank One CEO James Dimon has similarly been a major backer of Cashin, whose private equity group has been given significant independence to pursue its investing programme with the bank’s capital.
Under terms of the merger, Harrison will step down in 2006 and be replaced as chief executive officer of JP Morgan Chase by Dimon.