Reports have speculated that the move has been influenced by the passing of new legislation surrounding the financial services industry.
Under the terms of the Dodd-Frank bill, firms will be prevented from investing more than three per cent of their capital into private equity vehicles.
Banc of America Capital Investors is the unit to be spun out from the firm and is expected to focus on growth equity investments of as much as $100 million.
Travis Hain, partner in the venture, said: âThe decision to launch Ridgemont Equity Partners was a collaborative one, as we agreed that a new independent platform is well suited to the composition of our group and our strategy going forward. We are very excited about the future of Ridgemont.â
The 19 executives working as part of the fund will maintain a portfolio of investments valued at $1.5 billion.
As of the end of June, this figure accounted for almost a quarter of BofAâs private equity portfolio.
By Jim Ottewill