Bank of America is entering one of the hottest private equity markets with an offering of its own. According to regulatory filings, the Charlotte, N.C.-based banking giant is launching the $1 billion BA Private Equity Direct, its first p.e. fund, to be managed by its Boston office, home to private equity powerhouses such as Bain Capital, TA Associates and Thomas H. Lee Partners. BofA, according to the Boston Globe, is the latest bank to launch a private equity fund (Credit Suisse Group and Citigroup reportedly have their own in the works) to keep their customers satisfied. “There’s a perception that returns in the public capital markets haven’t been as robust as returns in the private equity space,” Peter Rosenblum of the law firm Foley Hoag, a p.e. specialist law firm, told the Globe. “There’s a feeling the banks’ customers don’t want to be left out of that arena.” That sounds pretty altruistic, but there is also bottom line issue – such investments generate hefty fees. Banks lately have resorted to rolling out their own p.e. vehicles, says Rosenblum, because “most top-tier private equity funds already have established groups of investors on whom they can rely for money.” The new p.e. fund is something of a return to industry. Once upon a time, BankBoston Corp. boasted the Banc Boston Capital unit, which managed more than $4 billion in venture capital investments. That came to an end when Fleet Bank took over and cut it at the end of the technology boom. Fleet and BofA merged in 1999.
