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JPM to Vend Global Special Opportunities - Analyst Blog

By: Zacks.com
Posted: 12/17/2013 6:33:00 PM
Referenced Stocks: BX;CG;JPM;KKR

The Financial Times reported that JPMorgan Chase & Co. ( JPM ) is divesting another non-core business with the aim to streamline its operations. The company is to sell its Asia-based investment unit, Global Special Opportunities Group.

Based in Hong Kong, Global Special Opportunities Group has nearly $2 billion in assets and it invests in distressed debt, nonperforming asset and private equity. The unit has 35 employees and is headed by Chris Nicholas.

JPMorgan is seeking bids from private equity firms and credit-focused hedge funds for Global Special Opportunities Group with a sale price of roughly $1 billion. Among the potential buyers, are The Blackstone Group L.P. ( BX ), The Carlyle Group LP ( CG ) and Kohlberg Kravis Roberts & Co. L.P. ( KKR ).

However, JPMorgan's decision to vend Global Special Opportunities Group is not due to the recently approved Volcker Rule. The unit's nature of business does not clash with the provisions of the Volcker Rule, which prohibits proprietary trading.

This year, JPMorgan has taken several decisions that have helped it to concentrate on core operations. Apart from vending its above-mentioned unit, the company decided to move away from the physical trading commodity and student loan businesses. Further, the company announced divestiture of One Equity Partners, its private-equity unit and decided not to take any new business from foreign correspondent banks.

All these will likely help JPMorgan to simplify its operations, comply with the new regulations and meet the strict capital requirements. Additionally, the company will be able to post more robust results by focusing on core operations.

Currently, JPMorgan carries a Zacks Rank #4 (Sell).



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