Magazine article American Banker

JPM Chase to Buy Majority Stake in a Hedge Fund

Magazine article American Banker

JPM Chase to Buy Majority Stake in a Hedge Fund

Article excerpt

In a move that would expand its product offerings for institutional and high-net-worth clients, J.P. Morgan Chase & Co.'s asset management arm is buying a majority stake in the New York hedge fund Highbridge Capital Management.

JPMorgan Fleming Asset and Wealth Management did not say how much it would pay in the transaction, announced Monday. However, earlier that day The Wall Street Journal, citing people familiar with the deal, said it could be valued at $1 billion.

Though the "strategic partnership" would give JPMorgan Chase a controlling interest in the fund's equity, the New York banking company would not manage the fund.

"Our clients continue to move more money into absolute return products," Jes Staley, the head of JPMorgan Fleming, said in a press release. "We want to add to JP Morgan's offerings in this area."

Highbridge, which manages $7 billion of assets, was founded in 1992 as a multistrategy hedge fund. It would operate as a separate entity under its co-founders, Glenn Dubin and Henry Swieca. It operates seven strategy groups that include global convertible arbitrage, statistical arbitrage, and structured private investments.

JPMorgan Fleming currently has $11 billion of hedge fund holdings -- including $3 billion in its own hedge fund, mostly invested in Europe and Asia, and $8 billion in fund-of-fund investments. It also offers other forms of alternative investments, including $9 billion of private equity funds, and it manages $18 billion of real estate investments.

Highbridge would not disclose its performance record, but it has been reported that the fund has outperformed the Standard & Poor's 500 index for the last 14 years. …

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