Carpenter & Co. to Seek $500 Mln Pool to Invest in Troubled Banks

Carpenter & Co., which is looking to invest in troubled banks, is expected to start fundraising this fall for its second fund, sources say.

Irvine, Calif.-based Carpenter will be going out with a $500 million target, persons say. This is up from its  first fund, Carpenter Community BancFund LP, which raised $280 million in 2009. Nearly all of Fund I has been deployed, persons say.

Carpenter was founded in 1974 as bank consulting firm by Chairman and CEO Edward Carpenter. The PE affiliate was formed in 2006. In November 2008, the Federal Reserve awarded Carpenter bank holding company status which allows it to take controlling positions (typically PE firms must keep their stakes below 24.9%).

Carpenter targets community banks impacted by the financial crisis.  As of March 31, there were 888 banks on the FDIC’s troubled bank list, a spokesman says. Several PE firms have invested in troubled banks including Thomas H. Lee, Warburg Pincus, the Carlyle Group and the Blackstone.

One of the more notable PE deals came in 2009, when the Carlyle Group, along with the Blackstone Group, Centerbridge Partners and WL Ross & Co. acquired the failed Bank United of Florida. The PE firms invested $900 million. In January, Bank United went public raising about $780 million (it sold 29 million shares at $27 each). The IPO was seen as a success for the PE firms which retained stakes in Bank United. Shares for Bank United, however, are currently off their $27 IPO price and are trading at $24.11 a share.

Carpenter typically invests in community banks with $3 billion in assets or less. It currently owns controlling stakes in Plaza Bank, of Irvine, Calif.; Bridge Bank in San Jose, Calif.; San Luis Obispo, Calif.-based Mission Community Bank; Professional Business Bank of Pasadena, Calif.; and, Bank of Manhattan in El Segundo, Calif.

Officials for Carpenter declined comment.