(
)
Think of it as the Dimon diet plan.
JPMorgan Chase’s CEO Jamie Dimon is unloading the bank’s private-equity unit, One Equity Partners, to focus on its bread-and-butter businesses.
The move comes as many critics of the bank are pushing “too-big-to-fail” institutions to get smaller.
“The One Equity team has produced strong returns over the years and we have been extremely pleased with their results,” Chief Operating Officer Matt Zames said in a statement.
However, Zames added, the “time is right for them to seek new capital to strengthen their global strategy, as they continue to manage our existing portfolio to maximize value to the firm.”
While the move will allow JPM to focus on its bread-and-butter consumer banking, asset management and investment banking businesses, one insider said some at Chase viewed the 12-year-old One Equity unit as a Bank One legacy business, dating back to when Dimon merged Bank One with JPMorgan in 2004.
JPMorgan has invested roughly $4.5 billion with the private-equity division, which has total assets of more than $7 billion.
One idea behind the spin-off is to allow the bank to eliminate what could be distractions to its client operation, in the wake of its $6.2 billion “London whale” trading losses.
No specific date for the spin-off has been announced, but it’s expected that the separation will occur in stages, while the PE partnership, headed by Dick Cashin and Rick Smith, manages JPMorgan’s current holdings.
Spinning off One Equity could also lower bottom line volatility.
Over the past year, the unit has registered $1 billion in losses, sources say, and JPMorgan would like to eliminate that volatility.
The value of the fund can vary from quarter to quarter because the price of certain assets that don’t often trade must be reflected in a process called marking to market.
The new independent One Equity hopes to raise any new money from limited partners here and abroad rather than from JPMorgan.