In an attempt to discard its non-core businesses,
Credit Suisse Group AG
) plans to vend its private-equity unit - Customized Fund
Investment Group - to Chicago-based Grosvenor Capital Management
LP. The deal is expected to be announced at the end of the
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The agreement is anticipated to be valued at an amount exceeding
$200 million in the form of cash and other considerations that
would comprise future payouts based on the performance of
private-equity investments. Moreover, the agreement between
Credit Suisse and Grosvenor Capital is yet to be finalized.
Like other banks, Credit Suisse has been affected by the
implementation of new rules on capital requirements and
investment activities. This has compelled the bank to shed its
non-core business units in order to conform by stricter rules for
managing capital and risk.
Credit Suisse's private equity unit manages revenue-generating
client assets invested in third-party private equity funds and
collects fees on these assets. At present, Credit Suisse
manages revenue-generating assets worth $20 billion.
Additionally, it has $10 billion in commitments and other assets.
On the other hand, Grosvenor Capital, a privately owned investor
in hedge funds, oversees client assets invested in hedge funds
worth $23 billion. On successful completion of this transaction,
Grosvenor Capital's client assets are expected to double in size,
thereby expanding the company's business.
Of late, Credit Suisse has been shedding its private-equity units
that allocate money to hedge funds and other investment managers.
Earlier in Apr 2013, Credit Suisse declared its intention to sell
its secondary private equity business, Strategic Partners, to
The Blackstone Group L.P.
). The deal, which is expected to be completed in the third
quarter of 2013, is subject to customary closing conditions.
Upon completion, the deal is expected to reduce Credit Suisse's
expenses. Moreover, by discarding its non-core businesses, the
company will be able to focus more on its core operations.
Additionally, it would help the firm in fulfilling the stringent
Credit Suisse currently carries a Zacks Rank #4 (Sell). However,
some stocks that worth a look include
BBVA Banco Franc
) and Sumitomo
Mitsui Financial Group Inc
). Both of these stocks carry a Zacks Rank #1 (Strong Buy).