JPMorgan Chase to spin off its private equity arm JPMorgan Chase is spinning off One Equity Partners, its private equity arm, as part of an effort to streamline the sprawling bank and inject outside capital into the fund. OEP, which manages a $4.5bn fund exclusively for JPMorgan, would "become independent" and raise its next fund from external limited partners, the bank said on Friday. US banks are facing new limits on their relationships with hedge funds and private equity units as part of the "Volcker rule" designed to curb proprietary trading and risky investments. However, people familiar with the situation said the Volcker rule was navigable for JPMorgan - particularly given loopholes that allowed companies to maintain long-term "merchant banking" investments. OEP's portfolio includes Mandiant, the data security company, while previous investments span Polaroid and Pirelli. The spin-off was triggered partly by JPMorgan's attempts to simplify itself and root out potential dangers and conflicts as part of the clean-up in the aftermath of the "London whale" trading losses, the people familiar with the restructuring said. "I have worked with the team at OEP for the past 12 years and have a lot of respect for all that they have accomplished and the great value they have delivered to the firm," said Jamie Dimon, JPMorgan's chief executive. Winding down JPMorgan's participation in private equity will also smooth its earnings. As investments are marked to market each quarter, they produce big swings in income, such as a $50m gain in the fourth quarter of 2012 veering to a $180m loss in the first quarter of 2013. A spin-off has been mooted ever since JPMorgan merged with Bank One in 2004, the deal that ultimately brought Mr Dimon to the helm of the biggest bank in the US. At that time, the new group had two private equity funds, OEP and JPMorgan Partners. Other banks such as Bank of America have pulled back from private equity. Goldman Sachs, Macquarie and Morgan Stanley are the banks to have raised the largest private equity funds in the past 10 years, according to Preqin, an industry data provider. Goldman has also been shrinking its own investment in its funds. The bank's own investments used to make up as much as 37 per cent of its private equity funds" money. Goldman has since shrunk that to 3 per cent to comply with the Volcker rule. OEP, run by Dick Cashin, who founded the investment firm in 2001, has tried to make a virtue of its ownership by the largest US bank by assets, proclaiming on its website that "our sole funding relationship with JPMorgan Chase & Co. enables us to be as patient as needed to achieve success." One Equity Partners has continued to strike deals this year. In January, it took majority control of two Houston pipe companies, Merfish Pipe & Supply and Pipe Exchange. The group also sold its 50 per cent stake in TV Guide, acquired as part of a deal with Lionsgate in 2009, to CBS for an undisclosed sum. Additional reporting by Tracy Alloway in New York