One Equity to spin out of JPMorgan

The US bank is offloading its private equity arm, One Equity Partners, as regulatory pressures force financial institutions to significantly reduce their exposure to the asset class.

One Equity Partners, the in-house private equity arm of US bank JPMorgan Chase, is to become independent. 

The partners of One Equity Partners will begin to raise their next fund from an external group of LPs. The fund will be separate from JPMorgan Chase, according to a statement.  

One Equity Partners will continue to make direct investments for JPMorgan for an interim period and will still manage the existing group of portfolio companies for JPMorgan. 

“The One Equity team has produced strong returns over the years and we have been extremely pleased with their results,” Matt Zames, chief operating officer at JPMorgan Chase, said in the statement. “The time is right for them to seek new capital to strengthen their global strategy, as they continue to manage our existing portfolio to maximise value to the firm,” he added. 

While at press time it was unclear why JPMorgan is offloading its private equity unit, financial institutions have been under regulatory pressure to divest their private equity operations.  

The financial reform law in the US, known as the Dodd-Frank Act, requires financial institutions to invest no more than 3 percent of their Tier 1 capital in private equity. Financial institutions regulated under the law are also restricted from representing more than 3 percent of any one fund’s total commitments. 

JPMorgan also has been trying to sell its LP stake of more than $400 million in CCMP Capital Advisors’ debut fund due to regulatory concerns, PEI exclusively revealed in April.

One Equity Partners provides growth capital financing. Its investments range typically from $50 million to $250 million in companies in North America, Europe, Asia, and South America.