Carlyle Backs Banking Services Provider
Boston Private Financial Holdings must raise $150 million from stock offerings in order to receive Carlyle funding.
July 23, 2008
The Carlyle Group plans to invest $75 million in publicly-traded Boston Private Financial Holdings to help the latter shore up its balance sheet.
Under terms of the deal announced late Tuesday by Boston Private, which also plans to raise $85 million through a secondary offering, Carlyle’s investment in the provider of banking, private banking, wealth advisory and investment management services was structured with two classes of non-voting preferred stock.
“Carlyle’s investment, combined with our own internal and external reviews, make us confident that we are addressing the current and foreseeable future capital needs of our affiliates,” said Timothy Vaill, chairman and chief executive of Boston Private.
Boston Private, a $277.6 million market-capitalized business headquartered in Boston, also announced a reduction in the dividend on its common stock to $0.01 per quarter, which is expected to generate $25 million in retained equity for the next eight quarters.
Carlyle’s first series of preferred stock, once converted at an initial price of $5.52 a share, will equal 10% of Boston’s common shares. If its second series of contingent preferred is struck at $5.52 per share, the firm’s investment will equal 19% when combined with the first preferred stock series. Additionally, Carlyle will receive warrants allowing it to purchase two additional shares of Boston Private’s Nasdaq-traded shares at $6.62 a share over the next five years for every five shares of common stock issued from the preferred stock conversion.
Vaill said the terms of the investment by Washington-based Carlyle align its interests with that of shareholders. “Their willingness to partner with us and make this type of investment in Boston Private is a gratifying validation that our business model is positively differentiated from our competitors.”
Boston Private must raise a minimum of $150 million from its public and private offering in order to receive funds from Carlyle. As part of the deal, Carlyle has appointed 35-year financial services veteran John Morton to the company’s board.
On Wednesday, Boston Private’s shares traded at $7.21 a share, or 9.4% above their previous close at $6.59 a share.
Goldman Sachs served as the financial advisor to Boston Private and Goodwin Procter LLP provided it with legal advice. Morgan Stanley served as financial advisor to Carlyle, which relied on Simpson Thacher & Bartlett for counsel.
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