GA, Stone Point seed government debt broker-dealer

The firms have invested $200m in JPMorgan spin-out Pierpont Securities, which will target increased opportunities in government debt trading as the US national debt rises above $12trn.

General Atlantic and Stone Point Capital are investing a total of $200 million in Pierpont Securities, a newly formed broker-dealer of government securities like US Treasuries.

Pierpont was formed in 2009 with the expectation that it would receive capital from investors, according to company chief executive officer Mark Werner, a former vice chairman at JPMorgan. Pierpont principals have committed $20 million to the firm. Pierpont trades, underwrites and distributes US treasuries and federal agency debt.

“Both Stone Point and General Atlantic are very active in the financial services space, and from that point of view, these guys are optimal investors for us,” Werner told PEO in an interview. “They know the space, they understand markets, they have similar but not identical investments.”

Pierpont was founded by three principals –Werner, Thomas Connor and Joseph Blauvelt. All three men had extensive careers at JPMorgan, moved to various roles at Bank of America and branched out on their own before forming Pierpont.

As the US national debt increases, topping $12 trillion this year, the US government will have to sell more debt, creating lucrative opportunities for broker-dealers who sell government debt, according to Pat Hedley, a senior vice president at General Atlantic.

“Pierpont is well-positioned at the junction of two macro trends we are eager to capitalise on – recent dislocation at large investment banks is causing a migration of talent and business to boutiques,” Hedley said. “And record government debt issuance combined with industry consolidation is creating a unique opportunity in the US Treasury market for new entrants.”

General Atlantic, with offices in Greenwich, Connecticut, New York and London, among other places, made another financial services investment in early February. The firm invested $250 million for a minority stake in Markit, a global financial information company that provides data and trade processing.

The firm, founded in 1980, has $15 billion under management.

Stone Point Capital was part of an investor consortium last year that invested $13.9 billion to acquired failed mortgage lender IndyMac. Stone Point is the manager of the Trident Funds, which have raised more than $10 billion in committed capital for investments in the insurance, employee benefits and financial services industries.