TPG’s WaMu stake hits new low

The Seattle savings and loan’s stock price is down 74 percent, spelling a paper loss of more than $1.4bn for TPG.

Private equity firm TPG is showing an unrealised loss of more than $1.4 billion (€1 billion) from its $2 billion investment in Seattle savings and loan Washington Mutual after the publicly listed bank’s stock price tumbled to a 52-week low yesterday.

The David Bonderman-led firm, which recently closed a $19.8 billion buyout fund as well as a $6 billion distressed financial services-focused fund, anchored a consortium that purchased a $7 billion minority stake in WaMu at $8.76 per share in April, betting the subprime mortgage-plagued bank had neared its bottom after posting a first quarter loss of $1.1 billion.

Instead, WaMu’s trading price has continued to plummet, reaching a low today of $2.30 before closing on $2.35 on credit analyst reports that the bank was struggling with mounting debt. 

At press time, the banks’ stock price had sunk to $2.29 in after-hours trading, representing a slide of 74 percent from TPG’s original purchase price and a 31 percent drop for the day.

Despite shedding its freestanding home loan offices and wholesale lending units earlier this year, WaMu posted a $3.3 billion loss in the second quarter.

Earlier this week, longtime chief executive Kerry Killinger resigned from the firm and was replaced with former New York Independence Community bank chief Alan Fish.

TPG is not the only private equity firm to see its investment in a publicly-traded financial institution sink precipitously. Warburg Pincus-backed bond guarantor MBIA finished the day up on $14.28, down more than 50 percent from the $31 per share Warburg paid in it its initial investment.

After initially falling in value, Corsair Capital-backed National City Bank’s stock price has recovered almost to the $5 per share the private equity firm paid for a minority stake in the bank earlier this year.