April 22 Credit Suisse Group AG has
agreed to sell a private equity business to Blackstone Group
, the latest move by an investment bank to sell a business
with illiquid assets in order to appease regulators and bolster
its balance sheet.
The Volcker rule - named after former Federal Reserve
Chairman Paul Volcker and part of the Dodd-Frank financial
reform law - is expected to limit bank investments in private
equity funds and was cited by Switzerland's Credit Suisse last
summer as a reason for exploring a sale.
Blackstone said on Monday it would buy Credit Suisse's
secondary private equity business which buys and sells stakes in
private equity funds and has $9 billion in assets under
management. The deal price was not disclosed.
Central to the deal was Blackstone President Tony James.
Before he was hired by Chief Executive Stephen Schwarzman in
2002 as his right-hand man, James was chairman of global
investment banking and private equity at Credit Suisse and was
instrumental in 2000 in starting the business Blackstone has now
agreed to take over, called Strategic Partners.
"Many of us here at Blackstone were once colleagues of the
Strategic Partners team, and this gives us high confidence that
it will be a seamless cultural fit here at the firm," James said
in a statement.
Like James, Blackstone's head of its credit investment
business Bennett Goodman joined Credit Suisse in 2000 with its
acquisition of Donaldson, Lufkin & Jenrette. Goodman joined
Blackstone in 2008, when Blackstone acquired GSO Capital
Partners, a credit investment firm he co-founded.
Blackstone's head of external relations and strategy Joan
Solotar is also a Credit Suisse veteran.
Headed by Stephen Can and Verdun Perry, Strategic Partners
has raised over $11 billion of capital commitments, completed
over 700 transactions, and acquired over 1,400 underlying
limited partnership interests since its launch in 2000.
With $218 billion of capital under management, Blackstone is
the world's largest alternative asset manager, active in real
estate, private equity, corporate credit and hedge funds. Like
its peers, it has been seeking to expand its investment platform
to manage more investor money.
The deal is expected to close by the end of the third
quarter of 2013 and follows moves by other investment banks to
wind down their private equity investment activities.
Bank of America Corp for example had $1 billion in
private equity investments at the end of the fourth quarter,
down from $5.7 billion at the beginning of 2010.