Credit Suisse Group AG has entered into an agreement to sell it's private equity arm to the Blackstone Group. This is the latest one of the many moves by investment banks to sell off businesses with non-liquid assets in compliance with regulatory requirements and to shore up its balance sheet.
This is the Volcker Rule in action. The rule is named after former Federal Reserve Chairman Paul Volcker and is part of the overall financial reform package instituted in the Dodd-Frank law. The law's short term effect is to limit the investments done by banks in private equity funds.
This is the reason for the sale. Blackstone confirmed the purchase of Credit Suisse's secondary private equity business that buys and sells private equity stakes. The business currently has US$9 billion in assets under management.
The details of the deal were not disclosed.
In a statement, Blackstone President Tony James said, "Many of us here at Blackstone were once colleagues of the Strategic Partners team and this gives us high confidence that it will be a seamless culture fit here at the firm."
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