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Private Equity Funds and Banks: Guidance on Equity Investments in Financial Institutions

April 30, 2008

By Jerry Comizio and Lawrence D. Kaplan

The National City capital raise with Corsair Capital is but the latest of the private equity forays into the banking business. Earlier this month we saw the TPG Capitals investment in Washington Mutual. Citadel Investment Groups investment of $1.6 billion in E*Trade announced last November was perhaps the first of these during the current capital crisis, and, given the state of the banking industry at the moment, there will surely be many more.

The purpose of this advisory is to highlight some of the major issues associated with these investments and to provide some degree of guidance as to the hows and whys of these transactions.

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Image: Lawrence D Kaplan
Lawrence D Kaplan
Of Counsel, Corporate Department