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April 20, 2011 at 12:41 PM
Bank of America Merrill Lynch has reached an agreement with senior leaders of BAML Capital Partners to separate the private-equity buyout unit from the bank, allowing them to form an independent management company.
The move, announced in a memo written by BAML Capital Partners chief Jim Forbes and published Wednesday in a Fortune blog, comes as a result of the bank’s decision to limit new investments in its Global Principal Investments (GPI) group and “focus our team’s efforts on portfolio monetization.”
The bank’s exit from its $5 billion private-equity (PE) buyout business reflects a trend among big banks to extricate themselves from stricter principal-investment regulations following passage of the Dodd-Frank reform bill’s Volcker rule. Goldman Sachs unwound most of its positions in its Principal Strategies proprietary trading desk in 2010, and Morgan Stanley last month sold off its Frontpoint Partners hedge fund to the fund’s managers.
BAML expects to complete the transaction before the end of June, and the BAML Capital Partners team will re-launch under a new name, Forbes wrote in his memo. “In addition to managing the Bank of America portfolio, the team has indicated their intent to raise third party capital for new investments.”
Bank of America spokesperson Jackie Fine confirmed the plan in an email.
