Context Capital Partners has raised $44 million for a family of private equity funds that invest in de novo and community banks.
Context Capital Partners today announced that it has raised and is now deploying additional capital for its Context BH Equity Fund family. The Context BH Equity Fund invests in de novo and community banks throughout the United States and now has a total of $44 million under management.
The Context BH Equity Fund focuses on investments in well-capitalized community banks operating in underserved markets with proven management teams, few problem loans, and high growth potential. These banks typically provide financially attractive initial investment opportunities, but have become even more appealing in the current banking environment. The ongoing banking sector crisis has negatively impacted all bank stocks, even those of comparatively healthy young banks.
“It’s no secret that the banking industry has been severely impacted by the current economic downturn; yet there remains a substantial valuation gap between relatively new community banks and their larger financial brethren,” said Bob Hendershott, Context BH Equity Fund manager. “Many of these community banks remain strong and focused, and are carrying on with business as usual – making loans, taking deposits, and helping individuals and businesses in their communities. Moreover, their relationships with solid medium-sized businesses in their communities are deepening as larger banks are distracted with other issues.”
“Market turmoil has created a number of scenarios that work in our favor. Capital is at a premium and priced accordingly, and most bank stocks have been knocked down to historically low levels. As a result, we’re seeing bank valuations at substantial discounts to their relative book value,” noted Context Capital Partners Managing Director Ron Biscardi. “In fact, in our investments over the past four months, we’ve realized an aggregate discount of more than 40 percent relative to tangible book value.”
The Funds’ managers, Yaron Brook, Ph.D., and Robert Hendershott, Ph.D., apply their extensive experience with bank trading strategies to identify investment candidates. Their proprietary evaluation criteria, deep commercial banking expertise, and industry insights enable the early identification of ideal community banks.
The Context BH Equity system tracks nearly 700 qualified community banks on an ongoing basis. Over the past 18 months, the team has evaluated over 300 deals and conducted significant due diligence on over 100 banks. With 27 banks currently in its portfolio, the Context BH Equity Fund is recognized as one of the few liquidity providers in the market.
The Context BH Equity Fund anticipates investing in up to an additional dozen banks during 2009. Consistent with Context Capital Partners’ unique Sponsored Private Equity Funds strategy, the Fund is highly-focused and structured around a distinct investment idea with strong potential for exceptional returns.
About Context Capital Partners
Context Capital Partners is engaged in the business of identifying and creating unique, replicable investment ideas. Context establishes Sponsored Private Equity Funds to support these ideas, their management teams, and ultimately, deliver superior returns to its investors. The Context BH Equity Fund II is one of seven Context sponsored investment vehicles, including the Titan Loan Investment Fund, L.P., a $100 million private equity fund dedicated to the acquisition of commercial real estate loan assets throughout the United States. For more information on Context, visit www.contextcp.com.