Carlyle invests $73m in east coast bank owner

The Carlyle Group will purchase at least $73 million in common stock from Virginia-based Hampton Roads Bankshares as part of an expected $255 million capital raise for the bank owner and operator.

Carlyle’s investment comes from its Global Financial Services Fund, which invests in banks, insurance companies and asset managers in addition to financial servicers. The firm closed the fund, which it had been raising since May 2008, on $1.1 billion last month. Private investment firm Anchorage Advisors will also invest roughly $73 million, with the remaining capital coming from other institutional investors.

“We are delighted to be part of a transaction that will accelerate the bank’s recovery and position it to be a leader in its markets both in service and stability,” said Carlyle managing director Randal Quarles. Carlyle and Anchorage will each purchase roughly 168.8 million shares for an aggregate price of $72,565,714, each owning 23.1 percent of the voting equity for Hampton.

Hampton Roads, which operates sixty banking offices in Virginia, North Carolina and Maryland also plans to conduct a $20 million rights offering after the closing of the capital raise to allow existing shareholders to purchase common shares at the same purchase price per share as the investors.

In May 2008 Carlyle made a $75 million investment in Boston Private Financial, a wealth management company. Boston Financial had obtained approval in November 2008 to receive $150 million from the US Treasury’s Troubled Financial Assets Program.

Along with Hampton Roads and Boston Financial, Carlyle has made two other investments from the fund, representing about 30 percent of the capital. Carlyle invested $550 million along with the Canadian Imperial Bank of Commerce and other institutional investors in Bank of NT Butterfield in March. The bank reported a net loss for 2009 of $213.4 million, resulting primarily from write-downs of mortgage-backed securities.

Carlyle believes it can “work well within the parameters established” by the US Federal Deposit Insurance Corporation for private equity ownership of banks, a Carlyle spokesperson told PEO in April. The FDIC has created rules that require higher standards for private equity ownership of banks than other entities, including higher capitalisation levels.