Chase Manhattan Corp. will consider a separate listing for its private equity unit, Chase Capital Partners, if its efforts to persuade investors to place a higher value on the unit do not bear fruit.
"Our goal is that, by providing a lot of information about it, the market will attribute the appropriate value" to Chase Capital, said Marc Shapiro, vice chairman of finance, risk management, and administration, in a presentation to analysts and investors Wednesday morning.
"If that doesn't happen, we will be required to look at a tracking stock," he said in response to a question from one of the audience members.
But he cautioned that "it was important that it be run as part of Chase."
Mr. Shapiro gave two scenarios for assessing Chase Capital's value to the corporation as a whole, encouraging investors to come up with their own numbers using the information the firm has recently started to provide about the unit's holdings.
One version, which looked at the few other publicly-held private-equity companies to find an estimated value for the private and public investments Chase Capital holds, used a historical rate of return of about 40% and put the value of the unit at $10 billion.
The other, which analyzed the business' cash flow, resulted in a post-tax discounted value of $18 billion to $31 billion.
"Either way, we suggest that you get a number higher than what is the implied number in the Chase current market capitalization of $75 million," he said.
Chase is on a campaign to educate Wall Street about how Chase Capital - whose portfolio, including funds invested by third parties, had a book value of $15 billion at yearend 1999 - is a key contributor to earnings. The firm is trying to counter misgivings among investors that the unit's revenues are too volatile to be an indicator of the company's strength.
Investments that never turned a profit, where the company never went public, or where Chase was not able to sell its stake for more money, are "in the four-percent range," Mr. Shapiro said.
Revenues from Chase Capital were $2.5 billion in 1999, about evenly split between cash revenues and the value of securities marked to market.
Seeking to distance themselves from the perception that a downturn in the initial public offering market would cut into its returns, Chase executives emphasized that an initial public offering by a company the private equity unit had invested in was an "accounting event," rather than "value creation."
Half of the investment revenues Chase Capital recorded in 1999, or $1.2 billion, were from investments the bank had sold, said Dina Dublon, chief financial officer of Chase Manhattan. The other 50% was derived from investment gains from companies that went public.
One of Chase Capital's most recent gains was revealed in a Securities and Exchange commission filing Wednesday, when Chase Capital said it anticipates a $180 million pretax gain from selling its stake in wireless provider Triton Cellular Partners LP, which it acquired for $70 million.
