Carlyle Group invests $75m in Boston Private
The Carlyle Group will invest $75m (€48bn) in wealth manager Boston Private Financial Holdings after Carlyle's financial services team last month stressed the importance of private equity as an untapped pool for struggling financial institutions.
Carlyle’s investment is a combination of convertible preferred stock and warrants. The investment would give Carlyle a nearly 25% ownership stake in Boston Private, which caters to high net worth clients, if it were possible to convert all preferred stock and exercise of all the warrants, according to a statement.
But one of the terms of the deal is that Carlyle cannot convert its preferred shares or exercise the warrants if doing so would give it 10% or more of Boston Private’s common stock.
Olivier Sarkozy, co-head of Carlyle’s global financial services team, said Boston Private is a “franchise we have long believed to be a leader in the high net worth marketplace.”
Sarkozy and Randal Quarles, a managing director on the financial services team, in June co-wrote an opinion piece in the Wall Street Journal that US regulators should relax the rules that restrict private equity ownership in financial institutions to 15%.
“Private equity is ready and willing to step forward in large amounts” by investing in financial institutions and thereby “restoring lending capacity, encouraging efficiency, and protecting the taxpayer,” wrote Sarkozy and Quarles.
This the second investment Carlyle has announced in the past week.
Last Friday, the firm announced it had made its first investment in Turkey, buying a 50% stake in a shipbuilder. On Tuesday of this week, a Chinese manufacturer that Carlyle had been pursuing since 2005 said it no longer intended to allow Carlyle to invest in it after negotiations between the two had ended.
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