"Bank of America Merrill Lynch will on Thursday announce the sale of its $1.9bn portfolio of investments in private equity funds to Axa Private Equity, amid growing regulatory pressure on banks to dispose of their buy-out interests.
The deal is one of the biggest since the financial crisis for the secondary private equity market, in which second-hand interests in buy-out and venture capital funds are traded by investors, often at a discount to their face value.
The move comes just weeks after US president Barack Obama announced plans to prevent banks from owning or investing in private equity or hedge funds under the Volcker Rule, inspired by Paul Volcker, former chairman of the Federal Reserve. "
Unreal. Obama's desires are actually being manifested in the market place. He will not even have to pass laws through legislation.
I predict this will be the first of many sales of buyside arms by the big banks. Is prop trading next? I have to imagine the Goldman news only fueled the need to separate buyside and sell side.
I'm not very familiar with BOA PE. Is this the majority of their PE assets or just a random group?
This looks like pretty big news - do you have link/source?
http://online.wsj.com/article/SB100014240527487038764045751997408098831…
sounds like their FoF business.
What does this mean for the IB market? Are we gonna see people like Goldman come way down given that the majority of their money is generated from prop trading?
yeah the government is just crushing goldman right now - proprietary risk taking is their life blood - and they have done a darn good job in it. it is interesting to see where it will be in two years.
Let's be clear. Goldman Sachs is essentially a giant hedge fund masquerading around as an investment bank (and a bank holding company at that with the advantages that come along with it). They should be broken up.
It's secondary PE - they are probably selling it because PE FoFs are one of the worst investment ideas ever and the fund is probably marked down 40%. I'd be surprised if it was anything to do with the new regulations. I'd imagine they're trying to flog the legacy ML real estate fund as well which is probably a mile underwater. As far as I am aware there are no plans afoot to spin off or sell BAML's captive primary PE house (the old Merrill Lynch Global PE).
Assume the volcker rule goes through... would you rather be the first out the exits, or part of the crowd when everybody's forced to selling their multi-billion dollar PE portfolios?
I'd expect more banks to follow suit and preemptively sell off assets that are going to get restricted.
http://www.nasdaq.com/aspx/company-news-story.aspx?storyid=201001211215…
quit watching cnbc and listening to CG run his mouth. Goldman does have a large prop trading desk, and one of the biggest PE groups in the world....but much of their revenue is derived elsewhere.
Agreed with the King. There's no reason Goldman should be allowed to enjoy bank status while basically operating as a huge prop desk/principal investment arm.
Regarding their revenue supposedly being derived from elsewhere; most of that is spread-driven FICC revenue at the moment and it has a huge amount to do with the fact that they have bank status and have been able to borrow through the discount window, overnight market at abnormal rates etc. Hedge funds and the like don't have that benefit.
Do you all see this affecting european-based banks at all ? Namely Barclays, DB , CS, and UBS?
I am curious to know what you guys think as far as how the Volcker Rule and future regulation and administration will affect traditional (non-secondary) PE firms?
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