JPMorgan fund seeks to 'democratize' private equity

JPMorgan is seeking to open private equity to more investors through a new fund offering.

The banking giant on Tuesday announced the launch of its JPMorgan Private Markets Fund  through its asset management unit's private equity group. The fund will allow clients with at least $25,000 to invest in shares of private companies. Private equity, as such shares are commonly known, is usually considered riskier than publicly traded stocks and is reserved for sophisticated and wealthy investors.

JPMorgan said in a release that one of its goals for its private markets funds is the further "democratization" of so-called alternative investments.

"We are witnessing increased demand from all investor types to look beyond public markets for access to compelling private company investment opportunities, and the launch of JPMF is an important step in expanding access to the potential long-term return and volatility benefits of private equity," Ashmi Mehrotra, the co-head of J.P. Morgan Asset Management's private equity group, said in a statement..

But the new fund won't be open to all clients. To use it to invest in private equity, investors must qualify as "accredited" under SEC rules. For individuals, that generally means people with at least $1 million in assets (excluding their houses) and an annual income of at least $200,000 for the past two years for single earners and $300,000 for married couples. Investors must also meet the criteria for being "qualified clients," meaning they either have a net worth of more than $2.1 million or at least $1.1 million under management with an advisor.

JPMorgan's website lists the fund as having $55.8 million in assets as of Aug. 31. JPMorgan's private equity group is expected to provide liquidity to investors by offering to buy back as much as 5% of the fund's assets every quarter starting in 2024.

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"The launch of JPMF aligns with our long-term vision to lead the global democratization of alternatives, building on our offerings across Real Estate, Real Assets, Hedge Funds and Liquid Alternatives," Anton Pil, the global head of alternatives at J.P. Morgan Asset Management, said in a statement.