Shiv Govindan is a name that community bankers should get to know.
The private-equity investor has quietly been involved in the industry for over a decade, but in some respects he is becoming more visible. Notably, he was selected earlier this month to become chairman of the $4.9 billion-asset First NBC Bank in New Orleans.
That appointment came on the heels of the Denver investor's addition to the board at The Bancorp in Wilmington, Del., after Pilgrims & Indians Capital, where he is a managing member, bought a sizable stake in the $4.5 billion-asset company.
While some observers might view those banks as scratch-and-dent buys — each is dealing with significant financial woes — Govindan sees those companies in an entirely different light.
Govindan and, by extension, his firm are "highly selective and opportunistic," he said, as they scout out companies with underlying value.
In that regard, Govindan relies heavily on past experience. While in college, he interned in the fixed-income derivatives department at Bankers Trust. The firm — which was sold to Deutsche Bank in 1998 — hired him after graduation. By that time, he was hooked on banking.
"I fell in love with it," Govindan said.
His involvement with banking evolved into an investing role. While president of Resource Financial Institutions Group, he managed about $4.3 billion in debt and equity investments in financial services companies, including community banks. He also met Josiah Hornblower; they went on to form Pilgrims & Indians in 2014.
Govindan's knowledge of banking isn't lost on Brad Elliott, chairman and chief executive of Equity Bancshares in Wichita, Kan. Elliott approached Govindan in 2012, while he was at Resource Financial, about making an investment. The Philadelphia firm eventually bought a 9.9% stake in the $1.5 billion-asset Equity.
"Private-equity investors are sometimes seen as [people] who contribute capital but don't add value, and I'd say it's the exact opposite in our experience," Elliott said. "He is a very intuitive person, very conscientious. … He really understands the banking space."
While Govindan excels at getting "into the weeds in a deal," Hornblower said one of his partner's strengths may be his soft skills. He "can get along with anyone," Hornblower said. "He just makes friends. … People trust him pretty quickly."
Govindan is a good listener who "doesn't have a problem in being direct and honest," Elliott added.
A blend of a high banking IQ and good people skills should prove particularly useful at First NBC, where Govindan has been an investor for the better part of a decade and where he recently succeeded Chief Executive Ashton Ryan as chairman. First NBC is struggling with accounting and financial reporting, due largely to issues in its tax-credit business, along with exposure to energy credits.
Govindan "brings a unique and valuable perspective to the … board as an investor with significant experience working with financial institutions," Ryan said in an email. He noted that Resource Financial was among First NBC's first investors.
Govindan also has a seat at the table at The Bancorp, which is dealing with a slew of issues, including a regulatory order tied to Bank Secrecy Act and anti-money-laundering compliance. He was appointed to the board after Pilgrims & Indians participated in a $74 million capital raise that also included Castle Creek Capital.
A spokesman for The Bancorp declined to comment.
Govindan's experience and style mesh well with his firm's investment strategy.
Pilgrims & Indians looks for financial institutions with "business models that are truly relevant in this new economy … where we have to think about technology," Hornblower said. "Rather than trying to raise some gigantic fund … we just look for great deals."
The Bancorp, known largely for its prepaid card operations, seems like a good fit.
Pilgrims & Indians backed the company through a pledge fund, where investors provide capital on a deal-by-deal basis. The Bancorp, meanwhile, is "banking next-generation financial services companies, where people are now migrating toward electronic payments and virtual payments," Hornblower said.
It helps that Govindan has fintech experience; from 2000 to 2004, he was a principal at Beehive Ventures, which invested in those types of firms. In addition, Pilgrims & Indians is looking at investing in "some nonbank companies," Govindan said.
Govindan may have experience with tech firms and New York finance, but he has an appreciation for smaller institutions and how they go about serving their markets, often under adverse conditions.
"It's a very, very hard time to be a bank," he said. "The interest rate environment is unforgiving. Regulatory compliance costs are escalating. … Opportunities remain, but it's a very difficult environment."
Community banks are "really carrying the torch for a local economy and a local culture, and I find that fascinating," Govindan said.