Private Equity Investing in Failed Banks - An Update

Analyst: Bill Bradway

June 3, 2010

Private equity investors have continued to actively pursue deals to acquire failed or troubled banks. In the past 18 months, a number of independent investor groups have raised, or have commitments to fund, an aggregate of more than $10 billion. With all this capital chasing the few deals that have been consummated with the FDIC, investors are evaluating their alternatives. Among the options are committing to invest in troubled, but not yet failed institutions and investing directly in pools of troubled assets. While investors had high hopes of winning at the FDIC auction table, most of the large, more appealing target institutions have been sold to other banks. The FDIC has only completed six assisted transactions with three independent private investor groups. This analysis provides an update to A & O Brief 2009-10 (Will Private Equity Succeed by Investing in Failed Banks?).

• How have PE investors in IndyMac Bank, BankUnited, and Flagstar Bank fared?
• What investment trends will get the most action in 2010 and beyond?
• How will these trends affect the bank tech vendor community?

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