Carlyle Group LP, the world’s second- largest buyout firm, has lined up about $1 billion to invest in banks as the Obama administration seeks to attract private capital to troubled financial institutions, according to two people familiar with the matter.
Bank stocks have been beaten down a lot, so bargain hunting in the sector should be proceeding apace. The article mentions restrictions on private equity ownership of banks, but that may be about to change big time. Carlyle's principals don't authorize moves into a sector unless their well-connected friends in government know that major changes in regulation or procurement are afoot.
I do question Carlyle's approach of doing piecemeal banking transactions. Their $75mm investment in Boston Private Financial holdings looks like a PIPE rather than a complete buyout. What gives? The strength of a private equity deal is its ability to take a company completely off the market and make sweeping changes. Incrementalism with PIPEs doesn't bring that strength to the fore.
Come on, Carlyle. I know you've got it in you. Find some nice regional banks with lots of overhead, decent cash flow, and no TARP participation.
Nota bene: Anthony J. Alfidi does not have any investments with the Carlyle Group.
