Merrill Ramps Up Private-Equity Push

Merrill Lynch(MER) is raising a $6 billion private-equity fund, according to an investor pitched earlier this year, as part of CEO John Thain's effort to increase the firm's presence in this area.

Merrill will reportedly contribute between $1 billion and $2 billion of its own capital to the effort, which the investor described as a "global opportunity fund," suggesting that it has the ability to invest in a range of assets and industries across the globe. Merrill hopes to raise the rest of the money from outside institutions, allowing it to collect management fees without risking so much of its own capital.

Merrill also pitched a $3 billion to $4 billion infrastructure fund late last year and two separate real estate funds: one that will invest in Asian property and one that will focus on European property, the investor says.

Other large investment banking institutions, including Citigroup (C), Morgan Stanley (MS) and Credit Suisse (CS) are constantly getting in and out of private equity. One major reason these firms are reluctant to raise their own funds is they don't want to upset their private-equity clients, who don't like competing with them for acquisitions.

Goldman Sachs(GS), where Thain spent most of his career prior to running NYSE Euronext(NYX), has done the best job of walking this tightrope between advising private-equity clients on acquisitions and doing its own private-equity investing.

Merrill executives have said publicly that they plan to step up their private-equity activities, but they have not revealed many details, except that the firm has contributed $700 million to a Pacific rim real estate fund it hopes will attract another $2 billion or so from outside investors.