JP Morgan has agreed to sell approximately half of the portfolio currently held by its private equity arm, One Equity Partners.
The bank has struck a deal with alternative investment manager Lexington Partners and Carlyle Group’s private equity subsidiary AlpInvest Partners. The transaction is expected to close by end of 2014, JP Morgan said.
While the financial terms of the agreement weren’t disclosed, the Wall Street Journal reported the bank is selling about $2 billion of $4.5 billion in total investments currently owned by One Equity.
After the completion of the sale, One Equity will spin out as OEP Capital Advisors, an independent private equity investment advisory firm, which will continue to manage the portfolio retained by JP Morgan.
The bank said the deal is not expected to have a “material impact” on its earnings.
“Lexington is pleased to partner with One Equity Partners to acquire a significant portion of JPMorgan Chase’s interests, and to support the future investment activities of the OEP team,” said Brent Nicklas, managing partner of Lexington.
AlpInvest’s Managing Director Tjarko Hektor also said the firm believes the deal is a “great opportunity to partner with one of the industry’s leading private equity firms.”
According to JP Morgan’s 2Q earnings, One Equity reported net revenue of $36 million for the quarter, compared with $410 million in the prior year. The bank said “lower net valuation gains on privately held investments” resulted in poor gains.
One Equity, founded in 2001 by former Olympic rower Dick Cashin, was bought by JP Morgan during its acquisition of Chicago-based Bank One in 2004. Its investments range from $50 million to $250 million per transaction, according to its website.
The sale is consistent with JP Morgan Chairman and Chief Executive Jamie Dimon’s intentions of “pruning” non-core divisions.
Most recently, the bank announced it would sell $1.3 billion of loans and securities to Bain Capital’s managed credit affiliate Sankaty Advisors last month, also expected to close by year-end. The bank also sold its physical commodities business for $3.5 billion to Swiss trading house Mercuria late June.
Last May, JP Morgan closed its transition management business that had $18.8 trillion in global client assets under custody.
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