US private equity firm GTCR Golder Rauner is the lead investor in a consortium that has agreed to a $200 million (€135 million) private investment in the public equity (PIPE) of PrivateBancorp, a Chicago-headquartered bank with 18 US offices. The bank caters to small to middle market public and private businesses, as well as high net worth individuals, and has assets of approximately $4.5 billion.
GTCR will invest $100 million in the PIPE deal, while boutique investment bank Mesirow Financial will invest $40 million. An additional $60 million will come from various businesses and investors including Edgewater Funds and Baird Financial. PrivateBancorp will use the capital to further its growth, according to a statement.
All of the securities to be sold are subject to a two-year lock-up agreement, subject to exceptions, and were priced at $28.71 per common share, PrivateBancorp’s closing share price on 23 November.
Under terms of the agreement, GTCR will pay $59 million to acquire 2.06 million PrivateBancorp shares. The private equity firm will also acquire $41 million of convertible preferred shares, which do not have any voting rights. The preferred shares are convertible into roughly 1.4 million common shares at a price of $28.71.
After the transaction’s expected completion on 11 December, GTCR will own roughly 7.2 percent of PrivateBancorp. The bank is also expected to nominate to its board Collin Roche, head of GTCR’s investment committee.
Morgan Stanley was PrivateBancorp's financial advisor, while its sub-advisors included Robert W. Baird & Co. and William Blair & Company. Advisors to a special committee of outside directors were Mesirow Financial and Keefe, Bruyette & Woods.
The 27-year old GTCR has long been an active investor in the financial services sector, though the investments tend to fall into its transaction processing or consumer services niches. Last year, it partnered with the Bank of New York to create hedge fund brokerage BNY ConvergEx Group. Its portfolio also includes Triad Financial Corp., the subprime auto loan company that was previously a division of Ford Motor Company. GTCR closed its ninth fund in November 2006 on $2.75 billion.