Disappointing close for JPMorgan Partners

A year on from its first close, JPMorgan Partners, the private equity arm of JPMorgan Chase has reached a final close on JPMorgan Partners Global Investors LP partnership fund. The fund has raised $1.7 billion from major institutions and high net worth individuals and will be invested alongside JPMorgan Chase’s capital over its five-year life.

JPMorgan Chase will commit a significant chunk of its own money to the fund; $3 for every $1 of outside money, bringing the total fund size to over $6 billion, a disappointing close for the firm which originally was said to be looking at a target of $13 billion. While in dollar terms this may be one of the largest funds of all time along with Blackstone’s $6.45 billion fund raised this year, in terms of money raised from outside investors, there are many other funds that dwarf this one.

The bank is braving tough market conditions, at a time when many of its counterparts are taking a break from investing in private equity such as Deutsche Bank, which has agreed a management buyout of DB Capital Partners and UBS Warburg, which has ceased new investments.

The group has been struggling with its technology portfolio in the light of an unsettled private equity market with limited exit opportunities and constrained financing. Most recent results for the third quarter posted an operating loss of $284 million compared to an operating loss of $153 million for the same period in 2001. Total new private equity gains were negative at $299 million and third quarter write-downs and write-offs drove results on private holdings.

But in spite of a tough year for fund raising, the firm has been doing the deals and since its first close a year ago the fund has made 39 investments in companies including Axis Speciality Limited; MedQuest; Chromalox; Berry Plastics; Brand Services; US Filter; Crosstown Traders; Klockner Pentaplast; Teksid Aluminium; Brake Bros and Corgentech.