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Report: Will JPMorgan Clients Lose Money on PIP 15 Investments?
Hedge fund Tiger Global Management has suffered losses of approximately $17 billion this year, reportedly “one of the biggest dollar declines for a hedge fund in history,” according to a May 2022 report by TechCrunch. Its rapid losses have raised questions about its venture capital fund, PIP 15, with experts pondering what the fate of its public investments will mean for its private ones.
According to a June 2022 report by Bloomberg, Tiger Management’s decline has drawn scrutiny to JPMorgan, which helped source $1.9 billion in capital for PIP 15. These funds were largely contributed by the firm’s “wealth-management clients and employees,” raised via “onshore and offshore conduits” that allowed for lower minimum investments than PIP 15 itself permitted. So far, per Bloomberg, PIP 15 has not suffered the downturn experienced by Tiger Global’s hedge fund, whose drastic losses it may end up avoiding thanks to a “shift in focus to early-stage venture stakes” before Tiger Global started losing money. Or it may end up heading in the same direction. “The ultimate outcome may not be evident for some time,” the Bloomberg analysis notes, “because it often takes several months for private markets to settle on new valuations after a significant downturn.”
What’s notable about PIP 15 approach to fundraising—like that of Coatue Management, a venture fund for which JPMorgan also sourced investments—is the reliance on individual millionaires rather than institutional investors like university endowments, philanthropic foundations, pension and sovereign wealth funds, and “the ultra-wealthy,” per Bloomberg. This shift reportedly occurred as those individual investors grew hungry for the substantial returns enjoyed by venture capital firms. “Banks, hungry for more ways to generate fees, helped them do it,” noted Bloomberg.
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