JP Morgan Chase to raise biggest fund ever

The private equity arm of JP Morgan Chase & Co is to invest $8bn of its own money and raise another $5bn for Chase Capital Global 2001 Fund LP.

Investment bank JP Morgan Chase & Co wants to launch the biggest ever-private equity fund, the Wall Street Journal reports this morning.

JP Morgan Chase, the bank’s private equity arm formerly known as Chase Capital Partners, is aiming to raise $5bn of capital from outside investors such as pension funds, endowments and foundations, and will commit $8bn of its own cash. If completed it would have a $13bn fund to invest in leveraged buy-outs, start-up companies and other kinds of private equity deals.

Chase Manhattan let it be known in November last year that it would commit $8bn in its private equity arm over the next five years.

The announcement was made in a regulatory filing for the $5bn fund which the private equity arm is hoping to raise. Unlike previous fund-raisings, the bank has also said that it will approach third-party investors for the fund rather than relying solely on its own balance sheet.

The new fund will be known as Chase Capital Global 2001 Fund LP. An aggressive marketing campaign for the fund is set to begin this week.

The newspaper reports that the partners running the fund will receive a management fee of 1 per cent in the latter stages of the fund’s life along with 20 per cent of the profits. Institutional investors will get a ‘priority return’ of 8 per cent or an 8 per cent payment upfront on their profits, before the partners will receive any payments.