New Moves In Asia-Pacific By JPMorgan

Investment bank JPMorgan is planning to expand operations in the Asia-Pacific region with a bid to take over a Hong Kong based private equity group and designate $750m for the team to invest in the region.

According to sources, the bank plans to double annual investments in the region which was in the area of $200m last year.

The team to be established will comprise of 10 people, who are migrating from TVG Capital Partners, which will subsequently be scaled back. The TVG team had previously focused on technology, communications and media devisions.

At this stage the team is expected to expand their range to include many new commercial enterprises, especially in the Indian and Japanese markets, though this is still speculation as the deal is not due to be announced until Tuesday.

Analysts have stated that this effort will prove JPMorgan’s ability to expand on investments even in the toughest of circumstances as with the current credit market issues. This should set JPMorgan up in a good light as many of the bank’s rivals have at this stage been forced to request sovereign wealth funds and external investors in an effort to equalize their balance sheets. At the end of December last year, JPMorgan’s Tier I capital ration was 8.4%.

JPMorgan isn’t the first to move into the Asia-Pacific region and invest significant proportions of their own funds, with other investment banks like Morgan Stanley and Goldman Sachs being the forerunners of such investments, however this new action does show JPMorgan’s desire to be considered among the best international investment banks.

The question is starting to be asked as to whether Asia is going to be able to continue in leading the world when it comes to initial public offerings, especially because of the current credit disturbance. None the less, JPMorgan is stepping up to the plate in terms of their investment capabilities in the region.

JPMorgan has suffered some minor setbacks, however, with the initial market prices for $3bn IPO of Reliance Power in India being less than convincing.

According to analysts, that minor setback may be just the enticement for new principal investments by banks looking to deal with any of Asia’s sizable pool of privately held of family company investments as there is currently a climate of distrust with IPO’s due to stock market instability.

Speculation is at this stage that JPMorgan will only be looking for minority investments of around $75m to $100m so as to not force the bank into competition with larger private equity firms, many of which are already well established in Asia and may even be looking to be represented in the region by banks like JPMorgan.

Due to the ongoing agitation in the credit market, JPMorgan will be closely monitoring any large-scale movements in the Asia-pacific region by rivals that could induce the bank to down-size their activities in Asia.

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