JPMorgan's Fundraise Strategy For Wealthy Private Bets Comes With Its Share Of Pros And Cons

JP Morgan Chase & Co JPM beat Morgan Stanley MS and Goldman Sachs Group, Inc GS to source more capital for Chase Coleman's Tiger Global Management just as it neared its peak, Bloomberg reports.

JP Morgan's customers became a top source of cash for Tiger's newest and largest-ever venture-capital fund, contributing $1.9 billion to the vehicle known as PIP 15 before fundraising closed in March. 

PIP fundraising closed in Q1 with a total of $12.7 billion. Tiger successfully collected $8.8 billion for PIP 15 by the end of October.

JPMorgan assumed multiple roles for PIP 15, sourcing investor capital and debt financing.

For Tiger, JPMorgan Private Investments set up onshore and offshore conduits allowing a much lower minimum investment and began soliciting capital in October.

Previously, JP Morgan tapped a similar client pool to collect $2.9 billion for a new venture fund for Philippe Laffont's Coatue Management.

However, the recent meltdown in Tiger's central hedge fund due to declines in publicly traded stocks reflects a cooldown in the venture-capital investment market.

Interestingly, venture-capital firms diverted from the deepest pockets to mere millionaires to perpetuate their insatiable fundraisings, writes Bloomberg. 

Many institutional clients forced money managers like Tiger to work more closely with banks and their wealthy clients to continue the spree of bets.

Tiger has been able to sustain PIP 15's valuations. However, private markets often take several months to settle on new valuations after a significant downturn. 

According to Bloomberg, in the first quarter, Tiger marked down the PIP funds by 9% in aggregate, with more cuts likely by the end of June. PIP 15 had a double-digit net internal rate of return since its inception.

Coatue began marketing its Growth Fund V in early 2021. In April, Coatue prevented some investors from withdrawing all their cash in its central hedge fund, which bets on public and private assets.

Photo via wikimedia Commons

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