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Bank of America Merrill Lynch to Exit Private Equity Business

Bank America Merrill Lynch has told employees it will exit the business of making private equity investments, according to an internal memo distributed to employees.

The private equity business, inherited from Merrill Lynch, had made roughly $5 billion worth of investments, including go-private transactions for companies such as HCA and Hertz.

The existing portfolio of investments will be wound down over the next few years.

The unit, BAML Capital, has not been particularly active in recent months, having made its last investment in the fall of 2010. Bank of America, under pressure to conserve capital, has apparently decided it could no longer provide capital to the unit, which has roughly 35 professionals.

A Bank of America spokesperson said BAML Capital is being spun off, and will be run by the current management team. The team will continue to manage the $5 billion in assets owned by BofA. Those assets will remain on the bank's books, with expecations they will be monetized. When that happens, the money raised from these investments will then be invested outside of private equity. The spinoff has no immediate impact on the bank's capital, any impact to capital would happen later once that assets are monetized and invested elsewhere.

BofA decided to spin off the unit as it is no longer a strategic business.

The partners in BAML plan to raise additional funds for future private equity deals.

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