According to a reliable source, JPMorgan Chase is in a quest to acquire a mega Brazilian alternative investment fund manager. Sources confirmed that the banking conglomerate is currently in talks to acquire Gavea Investimentos, an alternative investment fund manager in the country, in spite of a looming clampdown on banks with such operations in the Brazil.
However, pundits cautioned that the talks may not be fruitful as the Volcker Rule that places limits on the bank’s ability to own hedge funds and private equity funds still lingers over the suspected talks. The Volcker Rule proposal has been a point of irritation for mega banks like JPMorgan and is mainly targeted at preventing funds full of bank’s own money from being bailed out by taxpayers. It is currently still under legislation.
Regardless, firms such JPMorgan and others have continued with their investment plans to retain and boost operations, hoping that the incoming new rules would in the end allow banks to hold onto their profitable divisions. The overall aim is therefore to undercut the Volcker Rule by restricting such units to holding only client money. Additionally, banks are as well pushing for an exemption that allows them continued investment in hedge funds and private equity firms, in addition to a long delay that is expected to give banks a period of maximum seven years to enact the changes.
JPMorgan Chase owns Highbridge Capital Management, a mega hedge fund, and One Equity Partners, a private equity business. The bank said the Gavea Investimentos investment would considerably boost its asset management arm. The Brazilian Gavea Investimentos, a seven year old firm, manages around $5.3 billion, according to a report by the Financial Times.
Even though details are still sketchy, sources reported that if successful, the deal could be announced next month. The U.S. bank's move runs against an impending legislation in the country, which will limit the involvement of commercial banks in such activities. JPMorgan probably believes that deposit-taking banks will not be restricted by the new regulation from owning hedge funds.
JPM closed Friday's regular trade at $39.18, up $0.74 or 1.93%, on 37.27 million shares. JPMorgan Chase & Co. (JPMorgan Chase) is a financial holding company with principal bank subsidiaries such as JPMorgan Chase Bank, National Association (JPMorgan Chase Bank, N.A.), a national banking association with United States branches in 23 states, and Chase Bank USA, National Association (Chase Bank USA, N.A.), a national banking association that is the Firm's credit card issuing bank
June 21, 2010.