JP Morgan raises $1.7bn of third party cash

JP Morgan Partners has closed the world’s largest private equity fund on $7.7bn, with $6bn coming from its banking parent.

( New York-based JP Morgan Partners, the private equity arm of the private equity arm of JP Morgan Chase & Co., announced today it held a final close on Monday for the JP Morgan Partners Global 2001, LP fund on $7.7bn, making it the largest single fund ever raised in private equity history.


According to a statement, the fund raised $1.7bn in capital from third party institutions and high net worth individuals which will be invested alongside $6bn in JP Morgan Chase money over its five year lifespan. When launching the fund in November 2000, JP Morgan Partners had announced an initial target of $13bn.


The fund eclipsed the previous record holder, New York-based The Blackstone Group’s Blackstone Capital Partners IV, which closed on $6.45bn in July. That fund in turn surpassed Boston-based Thomas H. Lee & Co.’s Equity Fund V, which closed on $6.1bn in late 2000.


Still in the running is New York-based KKR’s Millennium Fund, which reportedly had raised over $5 bn by the end of last year and is still in fund raising mode.


JP Morgan’s record-breaking effort is qualified by two caveats. The fund failed to meet its original target, and the vast bulk of the fund’s commitments were derived internally, not on the fund raising trail.


But the target for third party commitments was revised downward from $5bn to $3bn after limited partners only coughed up $1bn six months after the fund was launched. JP Morgan was ultimately able to raise barely more than half of the revised total.


At the same time, JP Morgan’s internal commitment fell from the proposed $8bn to $6bn after the firm was forced to write down $1.2bn in bad private equity investments last year. JP Morgan posted $299m of private equity related losses in the third quarter of this year.


Since its first close in November 2001, the fund has made 39 investments.


JP Morgan Partners, formerly Chase Capital Partners, has over $25bn under management and has closed over 1,000 individual transactions since its inception in 1984. The firm has more than 150 investment professionals in eight offices internationally.