Credit Suisse to sell customised fund group

The Zurich-based investment bank said today that it is looking to sell one of its largest private equity fund investing groups, which has a $1 billion real estate practice, citing its illiquidity and lack of synergy with the rest of the firm.

Credit Suisse Asset Management is putting its Customized Fund Investment Group (CFIG) up for sale as its parent company, Zurich-based investment bank Credit Suisse Group, seeks to build a more liquid alternatives business. The firm also is looking to sell its private equity secondaries group, Strategic Partners.

“In line with the accelerated implementation of its strategy toward a more liquid alternatives business and given the residual uncertainty around the implementation of the Volcker rule, Credit Suisse intends to sell certain illiquid private equity businesses within the asset management division,” the firm stated in its second quarter earnings report, released today. “The targeted businesses have limited synergies with other businesses of the group.”

The sale of the two private equity businesses  is one of the measures that Credit Suisse is taking to boost efficiency and strengthen its capital position – with a goal of increasing its capital by 15.3 billion Swiss francs (€12.7 billion, $15.6 billion) – in preparation for the Basel III regulatory requirements.

A Credit Suisse spokeswoman confirmed the names of the two businesses but declined to comment further, saying only that the firm was just starting the process of reaching out to prospective buyers.

CFIG is one of the largest private equity fund investing groups at Credit Suisse, with more than 115 employees spanning its headquarters in New York, as well as other offices in the US, London, Hong Kong and Singapore. Headed by Kelly Williams, who founded the group in 1999, CFIG currently manages about $28 billion in commitments to private equity fund of funds and co-investment programmes in the US and internationally. In 2010, Peter Braffman, who previously was responsible for US real estate investments at Zurich Alternative Asset Management, joined CFIG to start up a dedicated real estate investment practice, which currently manages about $1 billion.

CFIG also has made a name for itself in the emerging manager space, overseeing about $6 billion in commitments to mandates for institutional investors such as the North Carolina Retirement Systems, Virginia Retirement System and Teacher Retirement System of Texas. For Texas Teachers, the group is managing about $200 million of a total $500 million that the pension plan had committed to its real estate emerging manager programme.

Strategic Partners, which is headed by Stephen Can, pursues secondary stakes in funds backed by leveraged buyout, mezzanine, real estate, venture capital and distressed securities, as well as fund of funds. The unit, which was formed in 2000, has raised more than $10 billion in commitments since its creation.