PE assets impacted in Bear Stearns sale

While the deal was put together principally to contain a meltdown in the public markets, J.P. Morgan Chase & Co.’s eleventh-hour purchase of Bear Stearns also includes a number of private equity assets that will be impacted by the acquisition.

Among the largest is Bear Stearns Merchant Banking, the company’s private equity affiliate, which invests in leveraged buyouts, recapitalizations and growth capital deals. As of December, the division had about $1.9 billion of assets under management, according to the company’s annual report.

In regards to venture capital, J.P. Morgan is also in line to manage Bear Stearns Health Innoventures, a biotech-focused fund that raised $213 million in 2001.

Since its inception, the fund has invested in 15 life sciences companies, 10 of which have gone public or were acquired. The latest exit was Santa Monica, Calif.-based Agensys, a developer of cancer therapeutics that is being acquired by Astellas Pharma US, the Illinois subsidiary of a Japanese pharmaceutical company that was advised on the transaction by J.P. Morgan.

Bear Stearns Health Innoventures currently has stakes in four pharmaceutical startups and was continuing to make follow-on investments in portfolio companies as recently as last summer.

Meanwhile, Bear Stearns Asset Management’s private equity business provides services for institutional and high net worth private clients. The division also manages venture funds and provides placement services for private equity and real estate funds.

In addition, the asset management group oversees funds of funds and separate accounts, including Bear Stearns Private Equity Ltd., a publicly listed company traded on the London Stock Exchange that invests in private equity primarily by acquiring interests in the secondary market, by co-investing alongside individual sponsors, and by making commitments to newly formed funds.

In connection with its merchant banking activities, Bear Stearns also has capital in private equity funds and has made direct investments in private equity-related businesses. Commitments to invest in private-equity related investments and partnerships total $729 million by 2020, including $101 million in 2008; $45 million in 2009-10, $130 million in 2011-12, and $425 million thereafter, according to the company’s annual report.