In a drive to downsize its non-core businesses, JPMorgan Chase & Co. (JPM) has decided to vend its loans and securities portfolio, valued at nearly $1.3 billion to Sankaty Advisors, the credit affiliate of Boston-based Bain Capital LLC. The news was reported by Financial Times.
This divestiture of JPMorgan’s Global Special Opportunities Group (GSOG) portfolio is in line with the bank’s strategy of raising capital and lowering down investments made with their own money so as to comply with the regulatory requirements.
Again, for Sankaty, which has been eyeing big commercial bank portfolios for some time, this deal may prove out to be the right strategy, complementing its existing product range.
The Global Special Opportunities Group portfolio comprises mezzanine loans in North America and Europe, and securities in Australia and Asia. The division, with headquarters in Hong Kong, has attracted investment firms which are interested in bolstering their presence in Asia.
Notably, many big financial investment managers such as The Carlyle Group LP (CG), Kohlberg Kravis Roberts & Co. (KKR) and The Blackstone Group L.P.’s (BX) credit arm – GSO Capital Partners LP – had targeted the debt portfolio of JPMorgan, but in vain. Sankaty, with $24.0 billion in assets under management, eventually won out.
In recent times, JPMorgan has been streamlining its operations to increase focus on core businesses. In July, the bank announced the divestiture of its corporate dealing services business. Further in April, the company sold its 401(k) record-keeping business and Retirement Plan Services business to Great-West Financial.
Prior to that, in March, JPMorgan inked an agreement with Mercuria Energy Group Limited for sale of its physical commodity trading business at a price of $3.5 billion. The latest divestiture is strategically in sync with its scheme of pruning non-essential operations and emphasizing on its main businesses.
Currently, JPMorgan sports a Zacks Rank #3 (Hold).
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