Zurich-based Credit Suisse Group AG (CS) announced an agreement to spin off its DLJ Investment Partners (:DLJIP) operations to Portfolio Advisors, LLC. The spin-off will also include the present investment team led by Igor DaCosta and Charles Harper. The transaction is expected to close by the end of this year.
Incepted in 1995, DLJIP provides private debt and equity capital, mostly to middle market companies related to the financing of leveraged buyout transactions. Additionally, DLJIP supports the growth, acquisition, recapitalization and refinancing of middle market companies. Since 1995, DLJIP has garnered $3.6 billion of capital and has completed about 75 deals through its funds.
Connecticut-based Portfolio Advisors is an employee-owned company that provides private equity, private credit and real estate investment solutions to both institutional and high net worth clients through separately managed accounts and combined fund-of-funds programs.
On completion of the deal, Portfolio Advisors will be the investment manager of three funds: DLJ Investment Partners LP, DLJ Investment Partners II LP and DLJ Investment Partners III LP. The deal will not result in any changes at the executive level and the team headed by Igor DaCosta and Charles Harper will join Portfolio Advisors.
During the course of this year, Credit Suisse has been shedding its private-equity units that allocate money to hedge funds and other investment managers. In August, Credit Suisse sold its secondary private equity business, Strategic Partners, to The Blackstone Group L.P. (BX). In the same month, Credit Suisse announced the intention to vend its private-equity unit Customized Fund Investment Group to Chicago-based Grosvenor Capital Management LP.
For Credit Suisse, the spin-off is expected to considerably reduce expenses. Moreover, by discarding its non-core businesses, the company will be able to increase its focus on core operations. Moreover, the move is an attempt by Credit Suisse to comply with the Volcker Rule, which poses restrictions on banks' exposure to riskier activities like proprietary trading or owning hedge funds or private equity funds.
Currently, Credit Suisse carries a Zacks Rank #3 (Hold). Some foreign banks that are worth considering include Westpac Banking Corp. (WBK) and Deutsche Bank AG (DB) with a Zacks Rank #1 (Strong Buy).