JPMorgan Remains In Talks To Buy Brazil’s Gávea

Aug 19 2010 | 3:14pm ET

The months-long talks between JPMorgan Chase and Brazilian hedge fund Gávea Investimentos have apparently survived the passage of the U.S. Volcker rule. The bank’s Highbridge Capital Management remains in advanced talks to buy the hedge fund, which was founded by a former governor of Brazil’s central bank, Brazil’s Valor Economico reports.

Highbridge and Gávea have been talking about a deal since at least February, and in June it was reported that talks had reached an advanced stage. But JPMorgan reportedly was reluctant to do a deal until it became clear what exactly the Volcker rule would and would not allow.

In its original incarnation, the rule would have barred bank holding companies from owning, investing in or sponsoring hedge fund firms. But as passed as part of the wider U.S. financial regulation overhaul, the rule merely puts strict limits on how much a bank can invest in alternative investment funds. Highbridge manages money primarily for outside clients.

It is unclear how much Highbridge and JPMorgan would pay for Gávea, which manages about US$5.8 billion and was founded seven years ago by Armínio Fraga, now also the chairman of the São Paulo stock exchange, BM&FBovespa. He remains a partner at Gávea.

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