No Shake-Up Seen For P.E. in Bank Merger –

The impending merger between Fleet Financial Group Inc. and BankBoston Corp. will not lead to any major restructuring at the two banks’ respective private equity units, according to Rick Fritz, president of BancBoston Capital and BancBoston Ventures.

Structural differences between BancBoston Capital and Fleet Equity Partners would discourage a full-scale merger of operations, Mr. Fritz said. BancBoston invests primarily as a limited partner, while Fleet Equity does more direct investing and has a more extensive fund-of-funds management business. Partners at Fleet Equity did not return calls.

Despite these differences, Mr. Fritz added, Fleet Equity stands to benefit from BankBoston’s extensive operations in Europe, Asia and Latin America, whereas Fleet Equity has direct investing strengths in the U.S. that will benefit BancBoston Capital.

“Both of us will have a lot more capital,” Mr. Fritz said. “And there are some leverage opportunities. But I don’t see a profound organizational change.”

On March 14, the two banks announced an agreement to merge, by which Fleet Financial will buy BankBoston for $16 billion in stock. The move would create the U.S.’s eighth-largest bank.

The combined private equity operations of the two banks reportedly will make up approximately 6% of the new bank’s pro forma earnings.

Basic structural differences aside, BancBoston and Fleet Equity have not kept entirely off of each others’ turf. BancBoston has been moving into the fund management business, as well. Since early 1998, it has run a $150 million fund-of-funds and is currently raising a second with a $300 million target (BUYOUTS July 6, 1998, p. 8).