JPMorgan Chase & Co., the biggest U.S. lender, agreed to sell a loan portfolio of about $1 billion to Bain Capitals credit arm, Sankaty Advisors, the Financial Times reported, as the bank moves towards a simpler structure.
The Boston-based investment firm won the auction for JPMorgan’s Global Special Opportunities Group portfolio, which includes loans in North America and Europe as well as securities in Asia and Australia. The transaction is yet to be announced, and is expected to have no impact on JPMorgans performance.
“Opportunity comes when debt levels increase more rapidly than the pace of economic growth,” Jonathan Lavine, managing partner of Sankaty, told the Financial Times. “Many things are priced to an overly optimistic outlook.”
The deal will add to Sankatys $24 billion worth of assets.
JPMorgan “isn’t getting rid of the operation because it violates the Volcker rule restricting proprietary investments”, a person familiar with the transaction said for the Financial Times. “But you never know. It is part of JPMorgan’s simplification drive.”
The US lender, which manages about $2.5 trillion in assets, has been “pruning” its non-core businesses, JPMorgan Chase & Co. CEO Jamie Dimon said in December, after last year Washington saw some banks as “too big to manage”, demanding a narrower scope and a simpler structure for major employers.
JPMorgan has stopped selling student loans and recently sold its physical commodities business. The bank is also in advanced talks for selling its private-equity OneEquity $4.5 billion business to Lexington Partners and Carlyle Group LP’s AlpInvest Partners, the Wall Street Journal reported earlier this month.
Insiders, however, say that the company was not planning more drastic moves to sell larger units and that “simpler” did not mean “smaller”.
JPMorgan Chase & Co. fell by 0.27% to stand at $59.01 per share as Wall Street trading closed on Friday, logging a one-year gain of 5.28%. According to the Financial Times, 29 analysts offering 12 month price targets for JPMorgan Chase & Co. have a median target of $66.00, with a high estimate of $76.00 and a low estimate of $60.00. The median estimate represents a 11.85% increase from the last price of $59.01.