Is It Morning For Bank Buyouts On Wall Street?

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Investment bankers preparing bank buyout pitches in the wake of the announcement that Sallie Mae will be taken private by a syndicate of private equity firms and banks, says Greg Zuckerman in this morning’s “Heard on the Street” column.
“Even as the coffers of private-equity firms have bulged in recent years, Wall Street has always assumed that buyout specialists would be wary of certain industries, such as financial services,” Zuckerman writes.
But the deal to take Sallie Mae private—and especially the fact that Blackstone also bid on Sallie Mae—seems to have revealed that private equity firms may have an appetite for financial-services companies and even banks. Possible targets include KeyCorp, Countrywide Financial Corp., CIT Group Inc. and iStar Financial Inc, according to Zuckerman.
One reason banks were long seen as “off limits” to private equity was the concern that regulators might not approve such deals. “Banks are heavily regulated deposit franchises that hold the savings of individuals, so regulators might be unwilling to allow a buyout firm to make a leveraged purchase,” Zuckerman writes.
But as private equity firms such as Blackstone have grown and become more diversified—some are starting to look more like full-fledged investment banks than pure buyout shops—bank regulators may be more tolerant of buyouts in this area. What’s more, private equity firms seem to have grown keenly interested in purchasing companies in heavily regulated sectors such as power utilities and highways.
Has Sallie Deal Put Banks In Play for Private Equity? [Wall Street Journal]

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