Hibernia Corp. plans to provide $30 million in venture capital to small companies that do not yet qualify for bank credit.
Hibernia, based in New Orleans, said it would dedicate $20 million for direct investments and make $10 million available to its subsidiary, Hibernia Capital Corp., which is seeking approval from the Small Business Administration to operate as a small business investment company, or SBIC.
"We expect to be a major player in the Louisiana venture capital market," said Hibernia Corp. president and CEO Stephen A. Hansel.
The bank estimates that Louisiana firms now have access to less than $100 million in venture capital.
While Hibernia and other banks have traditionally made loans to small businesses, few Louisiana banks have offered venture capital to small firms. In venture-capital agreements, banks gain part ownership of the firm, usually in the form of stock or subordinated debt.
A small-business investment company may purchase as much as 49.9% of a small firm's equity.
Hibernia Capital expects to be approved as an SBIC by yearend. About 300 SBICs now operate around the country. Recent regulatory changes have encouraged a number of banks to form such companies, including Utah's Zions First National Bank, NationsBank of Maryland, and Hibernia's New Orleans- based rival, First Commerce Corp.
The bank said it would concentrate its venture capital investments in companies with at least $5 million in revenues and that have been in business at least three years.
Hibernia closed its first small business investment Sept. 26, providing $2.1 million to help finance operations of an offshore gas field.
Heading Hibernia's venture capital effort is Floyd W. Collins, senior vice president and president of Hibernia Capital. Mr. Collins, 43, a native of Lafayette, La., previously served as managing partner of Conrad/Collins Merchant Banking Group Ltd., a Dallas-based investment firm.
Hibernia, which has $6.7 billion of assets, also said it would dedicate $20 million for small business investments to be made through its holding company. Bank holding companies may purchase up to 24.9% of a nonbanking company's equity.
