November 12, 2008 / 2:28 PM / 10 years ago

Lightyear's Marron eyeing banks, insurers

NEW YORK (Reuters) - Veteran Wall Street executive Donald Marron says he has looked into buying hundreds of banks and other financial companies discounted by the credit crunch, though for now he sees no need to rush into a deal.

Donald Marron, chairman and founder of Lightyear Capital, speaks at the Reuters Finance Summit in New York November 11, 2008. REUTERS/Brendan McDermid

Marron, the former chief executive of U.S. wealth management giant PaineWebber Group, in recent years has bought small insurance and finance companies for his private equity firm Lightyear Capital.

Plunging stock prices have turned many lenders into real bargains, but Marron said there are still too many questions about credit quality to be resolved before he signs on the dotted line. A catalyst for deals, he suggested, is the government’s Trouble Asset Relief Program (TARP), which could resolve from credit questions among acquirers.

“We’re taking to a number of regional and community banks. For many of them, the amount of money they will get (from TARP) will not be enough to take advantage of opportunities,” Marron told the Reuters Global Finance Summit on Tuesday. “There will be multiple opportunities for consolidation, where stronger community and regional banks can get the deposits or the businesses of the weaker ones.”

Marron, who sold PaineWebber to Swiss bank UBS UBSN.VX just as financial markets peaked in 2000, also told Reuters his firm is interested in acquiring insurers and reinsurers as well as transaction processors and asset managers.

Where there is a big opportunity is in insurance.”

Among insurers, “if you look at the public stocks that normally sell at multiples to book value, they are now selling at discounts to book value. Most of them are perfectly good, solid companies,” he said.

“We own several insurance companies and we’re looking at others,” he said.

Another area of interest is investing in asset management start ups, where fund managers can start with a clean slate.

Marron said the creation of TARP has introduced a different element to consolidation efforts, by easing a major source of concern.

“One of the reasons this all looked attractive is that buying banks and other things were too risky, because you couldn’t assess the assets. But with TARP you will have resolved that issue,” he said.

The sticker prices of financial companies have come down. Over the past year, he said the combined market value of financial stocks has been more than halved to $1.38 trillion from $2.83 trillion.

Yet the doubts that have hammered banks stocks also have stopped Lightyear from forging deals.

“We’ve looked at hundreds of companies. In the end, what’s held us back is we’re not sure we understood them,” he said. “To the degree TARP resolves that, then it will make it easier to go forward.”

That said, Marron contended he does not need to move quickly on a deal.

“There is plenty of time. This is not a case were we have to rush in to buy things,” he said. “In terms of markets, it’s too late to sell, and too early to buy.”

Editing by Leslie Gevirtz

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