Thursday, October 28, 2010

Exit Strategy: BankUnited IPO

OCTOBER 28, 2010, 1:50 PM ET

Blackstone: FDIC Would Support BankUnited IPO

By Shasha Dai,  Wall Street Journal

During a conference call with reporters today to discuss quarterly results, Blackstone Group President Tony James didn’t deny media reports that BankUnited Financial Corp. is contemplating an initial public offering. An IPO filing, which is expected this week, would come just over one year after the acquisition of the bank by a consortium of which Blackstone is part.
When asked about the swift trip to the public market and possible implications given the Federal Deposit Insurance Corp.’s wariness of private investors’ commitment to their bank investments, James said, “We are working closely with the FDIC on this. We wouldn’t do anything that the FDIC isn’t supportive of.”
“The raising of equity capital would strengthen the bank further,” James said. “And the FDIC likes that aspect of things.”
James said being public would also give BankUnited additional currency to purchase failed banks that are too small for stand-alone acquisition. “An IPO would give BankUnited the wherewithal and capital base to do that,” he said.
Andrew Gray, an FDIC spokesman, said he doesn’t have immediate comment on the matter since the IPO isn’t official yet.
Private equity-backed companies are lining up to go public, in part because funds that are nearing the end of their investment period are looking to sell down their holdings and return money to investors. According to a recent report from Ernst & Young LLP, PE-backed companies account for nine of the ten largest pending IPOs. But the huge backlog caused some to wonder whether all the IPO candidates would be table to get out of the gate - and if so, at what prices.
Later on the call, James qualified his comments by saying, “It is not clear whether the IPO will happen. If it doesn’t, we would be acquiring [smaller banks] with a more limited capital base.”
 - with reporting by Amy Or.