StoneCastle Financial is planning an initial public offering to raise up to $150 million for bank investments.
The New York investment management and advisory firm plans to sell 6 million shares at $25 each, according to a filing with the Securities and Exchange Commission.
Community banks are attractive investment opportunities for several reasons, including their long-term performance, favorable market conditions and demand for capital, StoneCastle said in the filing. The sector is also often overlooked by institutional investors.
StoneCastle said it would look for banks that have experienced management and produce stable earnings and that are headquartered in strong markets with growth opportunities. Investments in public and privately held banks would generally range from $5 million to $20 million and could include preferred equity, subordinated debt and common equity.
Additionally, StoneCastle would seek to buy preferred stock issued by community banks under the Troubled Asset Relief Program. The company estimates there are roughly 90 issuers in this program that meet its investment criteria.
StoneCastle already has a pipeline of potential investments totally up to $250 million that largely consists of preferred stock. It also has potential investment lined up for subordinated debt, convertible securities and common equity, the filing said.