Finance

Bank owned by private equity investors bets big on fund finance

Published

10 months ago

September 14, 2023

Bank owned by private equity investors bets big on fund finance

Following five years of ownership by TIAA, EverBank in Jacksonville, Florida, has refreshed its brand identity and launched a new fund finance unit.

Six weeks shy of its 25th anniversary, EverBank in Jacksonville, Florida, is opening its latest chapter with new ownership, a refreshed brand and a high-powered new signature business line.

Last month, the $36.5 billion-asset EverBank — known as TIAA Bank before its Aug. 1 sale to an investor group — announced it had launched a fund finance division led by two industry stalwarts, Jeff Johnson and Mike Mascia.

Founded in 1998 by a mortgage company, EverBank has long been linked to home loans, a connection that continued during the five years of TIAA’s ownership. One- to four-family residential real estate loans still made up more than 41% of the company’s $28.2 billion loan portfolio on June 30.

Now, EverBank is touting a more commercially oriented business model with fund finance as a major pillar. The move aligns well with the company’s ownership structure, given that several members of its controlling investment group, including Warburg Pincus, Sixth Street and Stone Point Capital, are active in private equity and venture capital, Johnson said.

“The opportunity to work for a bank owned by private equity, that understands this need and understands the services and understands the business proposition … really creates something special,” Johnson said in an interview. “Candidly, some of these big fund managers might [prefer dealing with a larger bank], but when Mike and I talk about what we’re doing with the team, that creates a lot of confidence. People end up leaving the meeting feeling like we need to figure out a way to do business together.”

“Jeff and I are thrilled to be part of EverBank and its leadership team,” Mascia said in a press release. “From day one, leadership has demonstrated a strong understanding and commitment to the fund finance business.”

Johnson founded and led Wells Fargo’s fund finance business and built it into the world’s largest global fund finance platform. Johnson is also a co-founder and the current chairman of the Fund Finance Association. Mascia, the EverBank division’s co-leader, chaired the finance practice and was a management committee member at the law firm Cadwalader, Wickersham and Taft, where he worked from 2006 to 2022.

Pairing Johnson and Mascia to lead EverBank’s fund finance initiative “brings together two of the historical architects of our industry,” Wesley Misson, who serves as head of fund finance and co-chairs the finance group at Cadwalader, said Tuesday in an interview. “It will be great to see what they can do.”

Funds that banks serve generally have tens of millions of dollars pledged by investors. However, to avoid making frequent cash calls, managers often secure loans from lenders. “They function like a credit card for the fund,” Johnson said.

Fund finance loans “enable managers to create a timeline of when they’re going to go to investors,” Johnson added. “Having nuisance capital calls is not something limited partners get excited about.”

Fund finance lending is characterized by extremely strong asset quality. It frequently generates follow-on deposit and treasury management business, so “banks can end up playing on both sides, being the lenders and the deposit-takers,” Johnson said.

Not surprisingly, banks have been drawn to the sector. They benefited from the feverish growth that fund finance enjoyed in 2021 and 2022, as capital pledged to investment funds surged to record levels. Indeed, deal flow grew so active it took on an “assembly line” character, Misson said. According to the Edinburgh, Scotland-based asset manager abrdn, fund finance has grown from humble roots following the 2008 financial crisis into a $600 billion industry.

“When we started our industry organization, we maybe had 10 or 12 banks in the room I would define as active participants,” Johnson said. “Really, throughout the last decade, it’s felt like 10 to 20 new banks have entered the market every year. I can easily rattle off the names of 100 banks that I’ve syndicated loan exposure to in the past couple of years.”

Still, the year 2023 has delivered a number of momentum-slowing body blows. This spring’s banking crisis hurt because each of the three banks that failed in March and April, Silicon Valley, Signature and First Republic, were active participants in the sector. Increased inflation and tougher capital requirements for banks also took a toll.

While fund finance’s supercharged growth rate has cooled, the market continues to grow, offering plenty of opportunities for lenders that take a more customized approach, Misson said.

That appears to be Johnson’s and Mascia’s plan for EverBank.

“We intend to build our brands on the level of expertise our team has,” Johnson said. “We continue to be really excited about where the industry is going. We’re bullish on private equity and the private market in general.”

EverBank isn’t the only bank to sense continued opportunities in the fund finance space. The $189 billion-asset Huntington Bancshares announced the hire of a 10-person fund finance team in June. In May, the $20.3 billion-asset Axos Financial disclosed it had hired Trevor Freeman, one of the founders of Signature Bank’s fund banking group, to serve as its director of fund finance.

Johnson and Mascia joined EverBank several months before the company announced the launch of the fund finance division on Aug. 8. The pair have added six members to their team and “are actively involved in talking to clients,” Johnson said.

The division has “a handful of loans” in the pipeline and anticipates closing its first deal in October, Johnson said. “We’re getting out there and starting to put money to work,” he added.

On Tuesday, EverBank officially completed the brand makeover from TIAA. It’s the second time around for EverBank, which served as the company name from 2004 until 2018.

Related Topics:Commercial lending Community banking Private Equity

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Finance

Pakistan President Zardari gives his assent to tax-laden Finance Bill criticised by opposition

Published

39 mins ago

June 30, 2024

Press Room

Pakistan President Zardari gives his assent to tax-laden Finance Bill criticised by opposition

Pakistan president Asif Ali Zardari
| Photo Credit: PTI

Pakistan President Asif Ali Zardari on June 30 gave his assent to the government’s tax-heavy Finance Bill 2024, which drew sharp criticism from the Opposition which labelled it as an IMF-driven document that was harmful to the public for the new fiscal year, according to a media report.

Finance Minister Muhammad Aurangzeb presented the Budget in the National Assembly on June 12, drawing sharp criticism from the opposition parties, especially jailed former premier Imran Khan’s Pakistan Tehreek-e-Insaf (PTI), as well as coalition ally Pakistan Peoples Party led by former foreign minister Bilawal Bhutto-Zardari.

On June 28, Parliament passed the Pakistani Rs 18,877 billion Budget for the fiscal year 2024-25, detailing the expenditures and income of the government.

The Opposition parties, mainly parliamentarians backed by currently incarcerated former premier Khan, had rejected the Budget, saying it would be highly inflationary.

During the National Assembly session, opposition lawmakers criticised the Budget, asserting that it was now an open secret that the document was dictated by the International Monetary Fund (IMF). Leader of the Opposition Omar Ayub Khan had denounced the budget as “economic terrorism against the people”.

Earlier this week, the PPP — which had initially boycotted the debate over the Budget — decided that it would vote for the finance bill despite certain reservations.

On Friday, the National Assembly passed the budget with some amendments. The motion was preceded by fiery speeches from the opposition, who described the budget as unrealistic, anti-people, anti-industry, and anti-agriculture, the Dawn newspaper reported.

President Zardari on Sunday gave assent to the bill in accordance with Article 75 of the Constitution, the media wing of the President House said, adding that the bill would be applicable from July 1. Under Article 75 (1), the president has no power to reject or object to the finance bill, which is considered to be a money bill as per the Constitution.

On June 28, the Government extended exemptions in specific sectors while announcing new tax measures in several areas to generate additional revenue in the coming fiscal year to meet the International Monetary Fund’s criteria.

Pakistan is in talks with the IMF for a loan of $6 billion to USD 8 billion, the report said. Earlier this week, PM Shehbaz confirmed that the budget was prepared in collaboration with the IMF.

Amendments include introducing a capital value tax on property in Islamabad, implementing new tax measures on builders and developers and increasing the Petroleum Development Levy (PDL) on diesel and petrol by Pakistani Rs 10 instead of the proposed Pakistani Rs 20.

According to the budget documents, the gross revenue receipts have been estimated at Pakistani Rs 17,815 billion, including Pakistani Rs 12,970 billion in tax revenues and Pakistani Rs 4,845 billion in non-tax revenue.

The share of provinces in the federal receipts will be Pakistani Rs 7,438 billion. The growth target had been set at 3.6% during the next fiscal year. Inflation is expected to be 12%, budget deficit 5.9% of GDP and primary surplus will be one per cent of the GDP.

Finance

Ukraine has a month to avoid default

Published

8 hours ago

June 30, 2024

Press Room

War is still exacting a heavy toll on Ukraine’s economy. The country’s GDP is a quarter smaller than on the eve of Vladimir Putin’s invasion, the central bank is tearing through foreign reserves and Russia’s recent attacks on critical infrastructure have depressed growth forecasts. “Strong armies,” warned Sergii Marchenko, Ukraine’s finance minister, on June 17th, “must be underpinned by strong economies.”

Following American lawmakers’ decision in April to belatedly approve a funding package worth $60bn, Ukraine is not about to run out of weapons. In time, the state’s finances will also be bolstered by G7 plans, announced on June 13th, to use Russian central-bank assets frozen in Western financial institutions to lend another $50bn. The problem is that Ukraine faces a cash crunch—and soon.

Finance

Florida Tech Names Kimberly Williams New Vice President for Administration, Chief Financial Officer – Space Coast Daily

Published

15 hours ago

June 30, 2024

Press Room

Florida Tech Names Kimberly Williams New Vice President for Administration, Chief Financial Officer – Space Coast Daily

will start at Florida Tech on July 8

Kimberly D. Williams, who has more than 20 years of experience in finance, higher education, and law, has been named Florida Tech’s vice president of administration and finance and chief financial officer. (Florida Tech image)

BREVARD COUNTY • MELBOURNE, FLORIDA – Kimberly D. Williams, who has more than 20 years of experience in finance, higher education, and law, has been named Florida Tech’s vice president of administration and finance and chief financial officer.

Williams most recently served as the vice president for business affairs, CFO and treasurer at the University of Findlay in Ohio. She will start at Florida Tech on July 8.

“The campus community feedback received when Kim visited us was overwhelmingly positive,” President John Nicklow wrote in an email to the university announcing her hire. “I’m confident that she has the skill set to help move our university forward, together.”

Williams graduated from Fayetteville State University with a bachelor’s degree in accounting and earned an MBA from Western Kentucky University. She received her Juris Doctor from the University of Arkansas School of Law.

She served as a civil litigation attorney in Missouri for five years before becoming chief financial officer and corporate counsel for a global, consolidated corporation in the aviation industry.

There, she oversaw the company’s overall financial health and gave project oversight across several fields as a strategic leader.

In 2016 Williams entered higher education, becoming business manager and director of business services for the University of Arkansas. After two years at UA, she was named assistant vice president for administrative and business services at Middle Tennessee State University.

As the senior administrator, she supported the department’s mission to provide effective and innovative business and administrative services to enrich learning and academic excellence on campus.

Williams stayed in Tennessee until 2022, when she became the vice president for business affairs, CFO and treasurer at University of Findlay in Findlay, Ohio. There, she oversaw all matters related to the financial management of the university, serving as the primary steward of its financial and physical resources.

Williams is a member of several professional associations, including the National Association of College and University Business Officers, the Council of Independent Colleges, the Association of Independent Colleges and Universities of Ohio, the Ohio Association of College and Business Officers and the National Association of Educational Procurement.

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