Pimco Buys on the Cheap -- This Time a Company
BOSTON (TheStreet) -- Some may look at it as bottom-feeding, others opportunistic investing. Pimco, the world's biggest manager of bonds, is buying a small stake in a tiny, struggling North Carolina bank in a Mayberry-like setting.
The Newport Beach, Calif.-based firm's year-old Pimco Bravo Fund is seeking government approval to acquire a 20% stake in ECB Bancorp (ECBE), an Engelhard, N.C., bank with a market value of a mere $32 million and deposits of $945 million.
Pimco clearly has something greater in mind for ECB, and most likely it is interested in quickly turning it into a regional banking powerhouse through acquistions.
Pimco Bravo is making a $25 million investment in ECB as part of an $80 million recapitalization of the lender. The fund is the single largest investor in the deal.Other investors in the private placement include Philadelphia-based Patriot Financial Partners, a private-equity fund focused on investing in community banks, thrifts and other financial-services companies, and New York-based Endicott Management, founded by Kenneth Londoner. The Federal Reserve Bank of Richmond is reviewing an application for the deal, according to a Reuters report today. Pimco began raising money for the Pimco Bravo Fund late last year, and it now has about $2.3 billion in assets. Bravo is an acronym for Bank Recapitalization and Value Opportunities, and in addition to targeting troubled banks, the fund is expected to invest in commercial and residential mortgage loans and other debt. The fund's investors are primarily institutions such as pension funds and endowments. Pimco's renowned bond fund manager Bill Gross isn't listed as a manger of the Bravo Fund. Pimco didn't respond to an e-mail seeking comment, but Dan Ivascyn, a Pimco managing director and a portfolio manager for the Bravo fund, told Reuters in a statement that "we see value from bank dispositions and recapitalizations and are targeting opportunities across a variety of strategies."
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