Warburg Pincus in $650m mutual fund sale

WARBURG PINCUS, the venture capital firm, is retrenching back to its core private equity business with a $650m deal to sell its mutual fund operations to Swiss banking group Credit Suisse.

The Swiss are also buying a 19.9 per cent stake in the firm's private equity business, although the chairman and chief executive, Lionel Pincus, insisted it will still be "owned and managed by its partners".

Warburg Pincus - an original investor alongside United News & Media and Pearson in Channel Five television - has been aggressively targeting Britain for expansion. It has funded a string of UK public-to-private deals, including last week's buyout of software group Rebus. Proceeds of yesterday's deal will be split between the firm's partners.

Warburg Pincus denied that the firm was in financial difficulty or under any pressure to sell. The mutual fund management business grew up as a result of Warburg Pincus's strong relationships with wealthy individuals but was not integral to main activities, the firm said.

Mr Pincus said the business, which signed a marketing agreement with Credit Suisse last year, had reached the point where being part of a larger group was necessary. "This linkage combines our strengths in the US with those of Credit Suisse Group around the world, in line with our belief that scale and global reach are critical strategic requirements for financial services firms," he said.

Warburg Pincus Asset Management employs 260 people and manages $22bn of assets. The deal will boost Credit Suisse's funds under management to more than $230bn.

It leaves Warburg Pincus with a rather smaller operation made up of 61 professionals, of which 10 are employed in London, $7bn in private equity, and a further $5bn of committed capital available for investment.

Bill Priest, chief executive of Credit Suisse Asset Management Americas, said the business was a very good fit. "We have been determined to increase both our retail and institutional distribution in the US. We also wanted to expand our business with high net worth individuals. This helps with all three."