JPMorgan sells off interest in global fund

In one of the largest secondary transactions to date, Goldman Sachs and CPP have stepped in to purchase a $925m interest in JP Morgan Partners Global Fund from its parent company.

Several months after saying it would reduce its stake in JPMorgan Partners Global Fund, JPMorgan Chase & Co. has agreed to sell approximately 18 percent of its interest in the colossal buyout unit.

Goldman Sachs Asset Management’s Private Equity Group and the Canada Pension Plan Investment Board (CPPIB) will buy $925 million (€764 million) of JPMorgan’s $5 billion interest in JPMorgan Partners Global Fund, a $6.5 billion fund with investments in 91 companies in the US and Europe.

JPMorgan, the third-largest bank in the United States, will remain the majority investor in the fund.

“I think this is probably the second largest secondary [transaction] of its type ever done,” said Mark Wiseman, head of private investments at Toronto-based CPPIB. “We were able to do due diligence on the entire portfolio and what we found there was a lot of good value, a lot of very good transactions.”

“This fund is almost fully invested, so we know what we’re buying. Whereas when we invest in the outset of a fund, it’s really done on a blind basis,” Wiseman added.

CPPIB was also involved in 2003’s monumental $1.8 billion purchase of a secondary private equity portfolio from Deutsche Bank, the largest transaction ever disclosed in the secondaries sector.

CPPIB, which has committed $10.4 billion to private equity funds, contributed about 35 percent of the capital for this deal, according to Wiseman. The rest was provided by Paul Capital Partners and Goldman Sachs, which contributed the majority of the investment.

In March 2005 JPMorgan announced it was spinning off JPMorgan Partners and renaming it CCMP Capital. The complete separation of its private equity arm should be complete by the end of 2006.