Hovde Financial Inc. of Washington is launching a $70 million-plus private equity fund focused primarily on the banking industry.
Portfolio manager Irving R. Beimler said he expects to invest about two-thirds of the money that Hovde Acquisition I LLC raises in community banks and thrifts.
Hovde, which plans to unveil the fund publicly on Tuesday, said it has received commitments in excess of $70 million and more are expected, though Mr. Beimler would not say just how much it is seeking to raise.
He said he expects to take about two years to fully invest the money.
The fund’s advisory board plans to play an active role in guiding the companies that get the cash, Mr. Beimler said. “We tend to partner with the companies we invest in,” he said.
Community banks are not shy in asking for help, Mr. Beimler said, “and we’re going to provide as much strategic assistance as we can.”
The fund will avoid investing in start-up banks, he said. It will favor young companies that have burned through their initial capital and need a second cash infusion to keep growing.
Turnarounds are another option, he said. Because the industry is generally healthy, banks in distress are hard to find. “It’s like finding the proverbial needle in a haystack,” Mr. Beimler said.
Money not invested in banks will go into other types of financial services providers, such as commercial finance companies, insurers, and asset managers.
Hovde Acquisition I will have a seven-year lifespan with options for three one-year extensions.
The fund’s advisory board includes former Federal Deposit Insurance Corp. Chairman L. William Seidman and Peter G. Fitzgerald, a former U.S. senator from Illinois.
Mr. Beimler joined Hovde in 1997. Earlier he worked as a commercial banker for more than 25 years, including stints in New York at Fleet Bank, where he was executive vice president and chief credit officer, and at Riggs National Corp. in Washington.
