Bank of America has decided to discontinue the fund placement business it acquired via the Merrill Lynch merger. A source familiar with the situation tells me that the Merrill team is currently helping to raise between 15 and 20 funds, and will continue full-service through at least the beginning of Q4 (and probably through year-end). It will not take on any new clients, but will work to transition existing ones to other placement agents if needed.
The group employs more than 30 professionals, including head of origination Loren Boston (who previously ran Citi’s placement biz). No word yet on if there will be some sort of independent spinout, or if most folks will go their separate ways.
Bank of America’s decision effectively ends Wall Street’s oldest and most fertile fund placement business. The unit began back in 1981, and its veterans have spawned similar groups at banks like Credit Suisse/DLJ and Lazard.
So why kill off a trailblazer? Here are three factors:
1. The fund placement market has been painfully slow since BoA bought Merrill, with fewer commitments meaning fewer commissions.
2. The Merrill business had made its bones representing third-party GPs, but John Thain and his merry band of Goldmanites redirected a significant part of its attention toward marketing Merrill-branded products. As Merrill’s brand got tarnished, the Merrill placement group got tarnished by tightened association.
3. But at least Merrill had a brand. Bank of America didn’t have its own fund placement group, which further hurt business. No wonder there had been rumblings for a while that some of the Merrill folks might be looking to make a move.