Merrill Lynch private placement team to spin out

Merrill Lynch's private fund placement team is spinning out to launch Mercury Capital Advisors. Michael Ricciardi, Enrique Cuan and Alan Pardee will be Mercury's three managing partners, and are expected to officially launch the firm next month.

Merrill's 28-year-old placement division, which Bank of America inherited when the two banks merged in 2008, will be wound down over the next four to five weeks, an industry source told sister news site PEI Asia. 

It follows Bank of America's decision in June to “downsize” the unit. At the time, a person close to the matter told PEO that some Merrill employees would continue to manage existing clients' business, but not take on new clients. From 2003 to 2008, the group raised approximately $92 billion of capital, most recently including Silver Lake’s $9.3 billion third fund, AIG Highstar’s $3.5 billion third fund and Avista Capital’s $2 billion debut fund.

Ricciardi, Cuan and Pardee are some of the group's most senior executives.

Ricciardi joined Merrill in 2004 from Citi along with Merrill's private equity placement head, Loren Boston, who is not part of the spin-out. In 2005, New York-based Ricciardi was promoted to replace Kevin Albert, now with Elevation Partners, as global head of the placement group, while Pardee has been the group's chief operating officer and Cuan has been a London-based managing director and head of international distribution for the fundraising group.

At Mercury, Ricciardi will oversee a team of about 24 professionals across offices in London, New York, Los Angeles, Seoul and Tokyo. It will seek new private equity, private equity real estate and infrastructure fund clients.

It is at least the second boutique group to be founded by former top executives from Merrill's placement division; MVision Private Equity Advisers was founded in 2001 by former Merrill managing director Mounir Guen. 

A number of institutions, notably Citi and Deloitte, have recently said they will downsize or halt their private fund placement platforms. “The fund placement model no longer fits with what big banks want to do,” the source said, adding that this is primarily due to unprecedented turmoil caused by the global slowdown in fundraising as well as proposed regulations against the use of placement agents in the US.

Amanda Janis contributed to this report.