Private equity firms finance commercial bank launch

Palladium Equity Partners, Carpenter & Company and FrontPoint Partners have acted as lead investors in Heritage Bank, set to commence operations next week.

New York-based investment firm Palladium Equity Partners has purchased just short of 10 percent of Heritage Bank, a commercial bank launching operations on 24 November, for an undisclosed amount.

Also lead investors in Heritage are Carpenter & Company, a private equity firm specialising in banks operating for less than five years, and FrontPoint Partners, an asset management firm owned by Morgan Stanley.

The capital raised by Heritage sets a new record in the state of New York for an independent startup bank, according to the bank. The minimum capital requirement is $60 million however the total amount raised by Heritage was undisclosed.

“Current financial upheaval and consolidation in the banking industry have created new opportunities for stable, highly customer-focused institutions,” Palladium managing director David Perez said in a statement, also noting the “safety and security of a bank with a pristine balance sheet”.

The bank will cater to privately owned small and medium-sized businesses, not-for-profits and the owners and senior managers of those organisations in the New York metropolitan area.

Palladium’s portfolio also includes California-based banks Mission Community Bank and PROMÉRICA Bank.

Palladium, founded in 1997, focuses its investments on middle market companies in areas including financial and business services retail, media, food, healthcare, manufacturing and media. It currently has capital of more than $1 billion.

The firm aims to capitalise on the US Hispanic market and is currently investing the Palladium Fund III, which closed with $520 million of committed capital in March 2006.