Warburg Pincus, one of the largest private equity fund managers in the world, has agreed to buy out Credit Suisse Group, the Zurich-headquartered international bank, as a strategic shareholder.
CS acquired a 19.9 percent interest in the management company of Warburg Pincus in July 1999. Terms of the sale of this stake back to the firm, which took effect on 1 January 2005, have not been disclosed.
In a statement, CS said the deal would have no significant financial impact on its balance sheet. It also said it intended “to maintain its existing commitment as an investor in the Warburg Pincus private equity funds as well as its cooperation with Warburg Pincus.”
Warburg Pincus, which is reportedly preparing a marketing campaign for a new buyout fund with an $8 billion target, declined to comment.
News of the transaction comes weeks after CS revealed plans to spin off DLJ Merchant Banking in New York, the private equity unit of Credit Suisse First Boston, CS’s investment banking arm.
A CS spokesperson in Zurich said that the group’s respective decisions to exit from Warburg Pincus and DLJ Merchant Banking were not related and should not be regarded as part of the same context. The former marked a change of strategy for CS, whereas the latter was based on the view that DLJ Merchant Banking was going to be more successful as an independent entity, the spokesperson said.
CS’s disposal of DLJ, which is currently marketing a new buyout fund, has been widely interpreted as a defensive measure, aimed at addressing concerns in industry circles over conflicts of interest facing investment banks with captive private equity operations. Whilst the banks’ financial sponsor groups are trying to win fee income from independent private equity firms, their merchant banking funds are competing head-on with the same firms for investment opportunities, a situation that the independent firms have become increasingly unhappy with in recent months.