A group of private equity investors, led by private equity firm Dune Capital’s chief executive Steven Mnuchin, has agreed a $13.9 billion (€10.8 billion) purchase of failed American mortgage lender IndyMac from the Federal Deposit Insurance Corp (FDIC), which insures bank deposits on behalf of the US central government. The acquisition is expected to complete by the end of March.
IMB Management , the investment group purchasing IndyMac, includes private equity firms JC Flowers, Stone Point Capital, MSD Capital and Dune Capital, as well as hedge fund managers George Soros and John Paulson.
Mnuchin said in a statement that IMB intends to operate the bank under new management and will inject “significant private capital” into the firm.
IndyMac, which specialises in loans made with little down payment or proof of assets, fell under the control of the FDIC last July after a run on the bank following the collapse of the US real estate market. It had $32 billion of assets and was the second largest American mortgage lender to collapse in 2008 after the failure of Washington Mutual in September. It had approximately $13 billion in deposits at the time of the collapse, and has just $6.6 billion now across 33 branches, according to the latest published figures.
As part of the deal the FDIC has agreed to assume losses on some of IndyMac’s loans. The new investors will shoulder the first 20 percent of the bank’s loan losses, while the FDIC will take on the majority of the deficit thereafter.
The deal comes as restrictions on such purchases have been eased by regulators. Previously, private equity firms could not hold more than a 24.9 percent stake in a bank without becoming a bank holding company. The exact stake which would be held by IMB has not been disclosed.
IMB has received provisional clearance from Office of Thrift Supervision to run the bank as a federal savings association, although a final decision has not been made.