Bank of America Corp., under government pressure to curb private-equity investments, plans to sell $1.2 billion of commitments to funds managed by Warburg Pincus LLC as about 30 employees join two new bank-affiliated ventures, said two people with direct knowledge of the matter.
Jason Cipriani, head of strategic fund investments, and about 10 colleagues are forming an office for Sterling Stamos, the New York investment firm, the people said, speaking on condition of anonymity because the moves haven’t been publicly announced. Travis Hain, a managing director who guides direct investments in companies, and about 20 bank employees are forming a separate firm, according to Bank of America spokesman Jerry Dubrowski.
Both groups will be based in the bank’s home town of Charlotte, North Carolina, and manage investments for the bank and their own clients, the people and Dubrowski said.
The Dodd-Frank Act, signed this week by President Barack Obama, forces some lenders to limit private-equity investments, and the Basel Committee on Banking Supervision may force banks to hold more capital to back their stakes. In April, Bank of America sold a $1.9 billion portfolio of private-equity fund interests to AXA Private Equity.
“There’s a general sentiment among many big organizations, and especially the banks, to move away from alternative assets,” said John Fennebresque, managing director of Fennebresque & Co., a Charlotte-based investment bank for mid- sized companies. “But any wise investor would still see private equity as a very viable asset class.”
Sterling Stamos was formed in 2002 by Peter Stamos, chairman of the investment advisory board for Major League Baseball. Merrill Lynch bought a minority stake in the firm in 2007 before the securities firm’s acquisition by Bank of America.
The bank is focusing on “private equity opportunities that will offer the best potential return for our company,” Dubrowski said. While the Dodd-Frank Act wasn’t the catalyst, “the decisions are also weighed against pending changes in capital requirements that will affect our industry,” he said.
Sterling Stamos General Counsel Jared Kanover referred comment to Bank of America, which said Cipriani and Hahn weren’t available for comment. The Wall Street Journal yesterday reported the bank’s plans to sell the fund stakes managed by Warburg Pincus.
Bank of America’s global principal investments firm had $14.8 billion of investments as of June 30, compared with $15.9 billion at the end of the previous quarter.
Dodd-Frank limits a bank’s investments in private-equity and hedge funds to 3 percent of capital. The new law gives lenders several years to reduce their holdings.