NEW YORK (Reuters) - Sandler O‘Neill, an investment bank focused on financial services, is selling nearly a 40 percent stake worth close to $250 million to private equity firms Carlyle Group CYL.UL and Kelso & Co, a source familiar with the situation said on Thursday.
Sandler O‘Neill said it had agreed to sell a substantial minority equity stake to Carlyle and Kelso, but did not disclose details about the transaction. The money will help closely held Sandler O‘Neill fund growth, the firm said.
The transaction also will provide liquidity to the firm’s partners who sell part of their holdings, the source said.
Sandler’s current management team, led by James Dunne and Jonathan Doyle, will remain in place after the deal, which is expected to close at the end of the year.
“It is a tremendous vote of confidence in what we have built at Sandler and will help us as we move our business to the next level,” said Dunne, senior managing principal, in a statement.
Dunne told Reuters in November last year that Sandler, which competes with firms such as KBW Inc KBW.N and FBR Capital Markets FBCM.O, would consider a transformational merger rather than going public.
“I owe it to everyone to be thinking about all of our possible options,” he said at that time.
Sandler O‘Neill earlier explored partnerships with other firms, including Gleacher & Co GLCH.O, the source said. Sandler also talked with Jefferies Group Inc JEF.N some time ago, the source said, declining to be named because these details were not disclosed.
Carlyle and Gleacher declined to comment. Jefferies, Sandler and Kelso were not immediately available for comment after business hours.
Dunne rebuilt the firm after the September 11, 2001, attacks on New York’s World Trade Center. Sandler lost 66 of its 171 employees in the attacks, including Herman Sandler and Chris Quackenbush, two of the three executives who ran the firm.
The investment bank has more than 300 people now.
Carlyle, founded in 1987 and one of the world’s largest private equity firms, has made a series of investments in recent days in financial services.
Late on Thursday, Carlyle agreed to invest $98 million as part of a $325 million capital raise by Central Pacific Financial Corp (CPF.N), a Honolulu-based bank.
That followed an agreement on Monday to invest in Georgia-based bank Brand Group Holdings, which is raising up to $200 million from a group of investors.
Kelso, founded in 1980, has made investments in more than 100 companies. It is currently investing its eighth investment partnership with $5.1 billion of committed capital.
Wachtell, Lipton, Rosen & Katz acted as the legal advisor to Sandler O‘Neill in connection with the transaction. Debevoise & Plimpton advised Kelso, while Simpson Thacher & Bartlett advised Carlyle.
Reporting by Paritosh Bansal, additional reporting by Megan Davies; editing by John Wallace, Gunna Dickson and Carol Bishopric