* More than half dozen firms put in initial bids
* Blackstone teams up with Carlyle, TPG with Lightyear
* Stifel, Raymond James among strategic bidders
* Warburg, Apollo also among bidders for Morgan Keegan
* Auction in second round, book value around $1.5 bln
(Adds source comments, background)
By Paritosh Bansal and Megan Davies
NEW YORK, Aug 12 Blackstone Group (BX.N), TPG
[TPG.UL] and Stifel Financial Corp (SF.N) are among more than
half a dozen firms that put in initial bids for Regions
Financial Corp's (RF.N) Morgan Keegan brokerage unit, sources
familiar with the situation said.
Some of these companies have paired up with other firms to
bid for the unit, which has a book value of about $1.5 billion,
the sources said.
Blackstone has teamed up with Carlyle Group, and TPG has
teamed up with with Lightyear Capital, the sources said.
Raymond James Financial Inc (RJF.N), Warburg Pincus [WP.UL]
and Apollo Global Management (APO.N) are also among the bidders
for the company, the sources said.
Regions, a bank based in Birmingham, Alabama that has not
yet repaid $3.5 billion in bailout money received from the
Troubled Asset Relief Program, hired Goldman Sachs Group Inc
(GS.N) in June to explore options for Morgan Keegan.
Regions said at the time that it agreed to pay $210 million
to state and federal regulators to settle allegations Morgan
Keegan fraudulently marketed mutual funds. [ID:nN1E75L158]
Morgan Keegan, which Regions bought in 2001 for $789
million, has about 1,200 brokers in its private client group
and also has investment banking and capital markets businesses.
Morgan Asset Management and Regions Morgan Keegan Trust are not
part of the business being sold.
Private equity firms, which make up the bulk of the
bidders, are attracted by Morgan Keegan's client base that they
could expand at a time when the biggest firms are hindered by
tighter capital requirements and regulatory oversight, one
"It had a reasonably sized group of investment advisers
that are pretty strong in the Southeast. That's what caused
Regions to buy it in the first place," one source said.
"It's got an investment banking business that has run into
some trouble during the financial meltdown and it has paid a
price for that," the source said. "You might be able to put
your arms around it."
Regions, Raymond James, Blackstone, Warburg, Lightyear and
Apollo declined to comment. TPG and Stifel were not immediately
available for comment.
Regions is hoping to move quickly on the auction, which is
in the second round. It got the initial bids late last month.
The company is meeting with the bidders and management
presentations are going on now, sources said.
The auction still is in the early stages, and some bidders
might have put in initial bids and signed confidentiality
agreements mostly to take a look at Morgan Keegan's books, and
so may drop out as the auction advances, sources said.
One option for the business is a management-led buyout with
the help of private equity investors.
Management prefers a private equity buyer and Morgan Keegan
employees are also interested in participating in a
transaction, one source said.
"They probably see that as a path to be a public company
again," the source said.
Regions shares fell 4.4 percent to close at $4.30 on the
New York Stock Exchange.
(Reporting by Paritosh Bansal, Joe Giannone and Megan
Davies and A. Ananthalakshmi; Editing by Carol Bishopric,
Robert MacMillan and Richard Chang)