NEWSMAKER-Sallie Mae deal seen as classic JC Flowers move
NEW YORK, April 16 (Reuters) - A deal to take student loan company Sallie Mae private adds to the lore of banker J. Christopher Flowers and his ability to master complex transactions involving financial institutions.
Sallie Mae, under fire from regulators and lawmakers, said on Monday it had accepted a $25 billion takeover bid from JPMorgan Chase & Co. (JPM.N) , Bank of America Corp. (BAC.N) , investment fund Friedman Fleischer & Lowe and J.C. Flowers & Co. -- the private equity firm run by Flowers.
Because private equity deals involve loading a company with debt, some on Wall Street have wondered whether a leveraged buyout of a major lender was possible or even worth the effort.
That speculation ended when Sallie Mae confirmed the deal, the biggest U.S. private private equity buyout in the financial sector.
"Chris, for so many years, has been one of the top investment bankers covering the space," said Brian Sterling, Co-Head of the Investment Banking Group at Sandler O'Neill.
"With this transaction, it just proves that he is one of the guys you have to talk to."
Flowers was a partner at Goldman Sachs Group (GS.N) when he resigned in 1998.
Soon after, he launched J.C. Flowers LLC, a New York-based private equity firm focusing on deals in the financial institutions sector.
He raised roughly $1 billion for the first buyout fund and the Wall Street Journal reported on Saturday that he is raising about $8 billion for the next one.
Flowers specializes in taking underperforming, complicated financial institutions, improving the businesses, and selling them for a nice profit.
"By financial services standards, (Sallie Mae) is a rapidly growing company, and that growth, and the important demographic group that it serves is different and attractive," Flowers said in an interview with Reuters on Monday.
"We think this group will bring a range of products, and a range of expertise to Sallie Mae, which will enable them to have a richer product offering to their student customers, such as loans and other products that should add up to faster growth," he said.
BIG DEALS
Flowers declined to comment on the report that he was raising money for a second fund.
In 2004, the firm, along with Ripplewood Holdings celebrated the $2.35 billion initial public offering of Japan's Shinsei Bank (8303.T), more than double what the investor group paid for the company in 2000. Continued...
