Bank of America eyes $1B private equity fund

No. 2 U.S. bank has set up a Boston-based fund seeking people willing to invest at least $500,000.
NEW YORK/WASHINGTON (Reuters) -- Bank of America, the No. 2 U.S. bank, is looking to raise as much as $1 billion for a private equity fund, a regulatory filing shows.
The bank has set up a Boston-based fund, BA Private Equity Direct, which is seeking people willing to invest at least $500,000, according to an Aug. 9 filing with the Securities and Exchange Commission.
Charlotte-based Bank of America is setting up a fund at the same time larger rival Citigroup (Charts) is trying to set up a $2.5 billion private equity fund, according to a person familiar with the matter.
Private equity funds are raising record sums, as a healthy economy and low borrowing costs fuel a surge in buyouts.
Investment banks such as Goldman Sachs (Charts) and Merrill Lynch (Charts) are also profiting in the sector.
Experts have said buyout firms raised more than $200 billion last year. A report by Private Equity Intelligence, which tracks fund raising, said more than 700 new funds are trying to raise an additional $342 billion.
In July, New York-based Blackstone Group said it closed a $15.6 billion private equity fund, the world's biggest.
U.S. buyout funds returned 31.3 percent in 2005, five times the return in the Standard & Poor's 500, according to data provided by the National Venture Capital Association.
The Bank of America (Charts) private equity fund was incorporated on May 6, the Aug. 9 SEC filing shows.