JP Morgan to pull out of fund placement

The investment bank is likely to close its already pared back private equity fund placement operation unless the fundraising environment improves.

JP Morgan, the bulge bracket US investment bank, is mulling plans to shut down its global private equity fundraising advisory business in response to poor market conditions facing private equity firms looking to raise capital.

 

A source close to the bank said it was “not probable” that the Private Equity Fund Group would continue to operate after completing existing assignments.

 

Following a recent headcount reduction, the division is currently operating a skeleton staff of six professionals split across offices in New York, Dallas and London. “They’ve let a bunch of people go which is hardly surprising given the current situation in the market,” said one observer. “Fundraising has fallen sharply this year and there is a shortage of new mandates coming through.”

 

Prior to the lay-offs, JP Morgan’s fund placement group had comprised 19 professionals. Among staff to have left the group’s London office, which is headed up by Nicholas Hofgren, are Tareq Al-Mudahf and Renwick Paige.

 

The division is currently working on a small number of mandates including a fundraising campaign for UK firm Cabot Square Capital. Past assignments include placements for Bison Partners, KRG Capital and JP Morgan Partners, the bank’s captive private equity manager that is preparing to close an $8bn fund before the end of the year.

 

According to industry estimates, European private equity firms have raised less than E10bn so far this year. In the boom years of 2000 and 2001, general partners had raised in excess of E40bn per annum.

 

Market practitioners doubt that market sentiment is likely to improve any time soon. George Anson, a senior executive at international fund of funds manager HarbourVest, told an industry gathering in Munich last week that fundraisers should not expect a recovery ahead of 2004.