Boston Private Financial Holdings, Inc. (Boston Private) announces that The Carlyle Group (Carlyle), a global private equity firm, will invest approximately $75 million in newly issued equity securities of Boston Private, a national financial services organization.
Boston Private has been evaluating alternatives to raise additional capital to further strengthen its balance sheet. This investment by Carlyle is an integral component of the overall capital raising plan that Boston Private has developed, which is expected to generate in excess of $185 million in new equity capital. In addition to the Carlyle investment, Boston Private announced in a separate release, that it intends to raise approximately $85 million in a public offering of its common stock. Boston Private also announced a reduction in the dividend on its common stock to $0.01 per quarter which is expected to generate approximately $25 million in additional retained equity over the next eight quarters.
“We are pleased that Carlyle has agreed to become an important shareholder of Boston Private and to make this investment in our firm,” says Timothy Vaill, chairman and CEO of Boston Private. “Carlyles investment, combined with our own internal and external reviews, make us confident that we are addressing the current and foreseeable future capital needs of our affiliates. As a result, we can move aggressively to put the Southern California credit problems behind us. In addition, while the current environment presents certain challenges, it is also creating positive growth opportunities for our strong-performing affiliates. This capital raise also ensures that we will have sufficient capital to allow them to pursue those growth opportunities where appropriate.”
“We are thrilled with this opportunity to make a meaningful long-term investment in Boston Private, a franchise we have long believed to be a leader in the high net worth marketplace, says Olivier Sarkozy, co-head of Carlyles Global Financial Services team.
“In these challenging economic times, we have looked at many investment opportunities in the financial services sector and have seen few that we have found as attractive,” says Randal Quarles, a managing director on the Financial Services team. “We are attracted to Boston Privates strong history of growth and their diversified business structure that derives revenues not only from the private banking business but from strong fee-based businesses.”