Jefferies Financial Group said on Tuesday it plans to reduce the size of its merchant banking portfolio as part of a restructuring aimed at focusing on its global investment banking business.

The plan includes spinning off its holdings in Vitesse Energy before the end of this year to create a new publicly traded oil and gas company which will list on the New York stock exchange.

The financial services company will also sell its wood and lumber products business, Idaho Timber, in two deals for a combined $239 million.

Jefferies' merchant banking portfolio, which includes investments in real estate, oil and gas, and public companies, was worth $1.6 billion at the end of May, according to a regulatory filing.

Investment banking revenues have tumbled across Wall Street banks including Morgan Stanley and Bank of America after a record run in 2021, as geopolitical turmoil and fears of a looming recession have dented dealmaking.

The company also aims to merge Jefferies Group, its investment banking arm headquartered in the United States, into the parent company by fiscal year-end 2022.