KeyCorp is spinning off an investment group that invests in middle-market companies in a move that will benefit its corporate finance arm.

On April 1, Key Equity Capital will become a limited partnership and be renamed Blue Point Capital Partners.

Key Principal Partners, the corporate finance arm of the Cleveland-based banking company, will contribute $100 million to Blue Point, in exchange for a corresponding stake in the company. Blue Point will seek to raise another $300 million from outside sources.

Key Principal Partners will be a limited partner of Blue Point, which will be managed by four general partners: David Given, John Kirby, Shannon Smith, and Bob Wainio.

John R. Sinnenberg, president of Key Capital Partners, said that the unit was being spun off so that it could benefit from an influx of capital. Securing some investors for Blue Point will allow KeyCorp to concentrate on other areas of Key Principal Partners. The banking company plans to spend up to $1 billion in capital to diversify its investment capabilities.

The corporate finance arm has lacked expertise in high-growth areas such as technology and telecommunications, Mr. Sinnenberg said, and is hiring principal people with such experience to direct the investments.

The group will also pursue partnerships with other investment groups expert in financing telecommunications, technology, and other high-growth sectors.

Key Equity Capital posted about $1.5 billion in revenues last year and has more than $200 million invested in 16 companies. It will continue to invest in companies with valuations from $20 million to $250 million in a variety of sectors, said Mr. Smith.

Mr. Sinnenberg said that Blue Point did not intend to go public and that the unit was not being spun off in reaction to legislation limiting the stake that a bank-owned venture capital firm can take in nonfinancial companies.

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