Thursday, March 4, 2010
Volcker Rule would Ban Banks from investing in Private Equity or Hedge Funds
President Obama yesterday sent Congress the Volcker Rule language, and as PE HUB notes it would indeed ban banks from investing in private equity or hedge funds. If enacted, this would mean at least two things: (1) Banks with direct investing arms would have to divest, either via sales to PE firms or indipendent spinouts. In either case, it's unclear if existing bank LP commitments to those platforms would be grandfathered in. (2) Banks would not longer be able to be LPs in private equity funds, thus depriving the alternatives market of a major capital source. Again, the grandfathering issue arises -- although perhaps this is where secondary funds can spend all that cash they've been hoarding. Read More from Reuters PE Hub.
Posted by Stuart Rosenthal