Credit Crisis Presents Significant Opportunities for Private Equity, Says Piper Jaffray Private Equity Insights Report

09/11/2008 | 09:41:00 AM

NEW YORK, Sep 11, 2008 (BUSINESS WIRE) -- Despite the credit crisis, opportunities for private equity in financial services remain compelling, according to a recently released report by the financial institutions and financial sponsors groups at Piper Jaffray. The 2008 paper titled, "Private Equity Insights: Opportunities for Private Equity in Financial Services," is part of an ongoing effort to provide thought leadership on the subject of private equity investing in financial services.

Since August 2007, financial institutions have written balance sheet values down by approximately $500 billion¹. With total system wide loss estimates ranging from $1 trillion to $2 trillion, it is likely that financial institutions will experience additional losses and write-downs², according to the report. In light of this, Piper Jaffray believes that private equity is a logical and significant source as more capital will need to be raised, and value-seeking private equity investors will be presented with a significant investment opportunity.

"Financial services companies, as well as regulators, shareholders, boards of directors and management teams, are recognizing the value-added sources of smart capital that private equity represents," said Tom Chen, head of the financial institutions group at Piper Jaffray. "Forty percent of all private equity deals announced in 2008 involved financial services companies as compared to only 2 percent in 2001³."

In addition to a financial services market update, the report contains several new topics, including:

-- a review of the Credit Crisis of 2007-2009, including what caused it, its implications for private equity and when will the bottom form;

-- a discussion of deal terminations and re-negotiations and the implications for private equity going forward;

-- a case study of the S&L (savings and loan) crisis and the corresponding activities of the Resolution Trust Corporation and private equity;

-- an update on the control-friendly structures available to private equity in depository acquisitions; and

-- an updated list of private equity transactions in the financial services sector since 2002, including minority investments and terminated transactions.

The report was released in connection with the Piper Jaffray Financial Services Private Equity Conference on Sept. 10 in New York, which drew approximately 180 clients. Attendees had an opportunity hear from more than 20 privately-held companies who gave presentations on their business and also participate in two panel discussions: "'Banking' on Private Equity: An Untapped Source of Capital" and "Emerging Trends and Opportunities in Payments."

The "Private Equity Insights: Opportunities for Private Equity in Financial Services" report is available for clients at

¹ Source: Bloomberg LP; data as of July 31, 2008

² Source: International Monetary Fund and New York University Professor Nouriel Roubini, August 2008

³ Source: Thomson Financial and Piper Jaffray

About Piper Jaffray

Piper Jaffray Companies is a leading, international middle-market investment bank and institutional securities firm, serving the needs of middle-market corporations, private equity groups, public entities, nonprofit clients and institutional investors. Founded in 1895, Piper Jaffray provides a comprehensive set of products and services, including equity and debt capital markets products; public finance services; mergers and acquisitions advisory services; high-yield and structured products; institutional equity and fixed-income sales and trading; and equity and high-yield research. With headquarters in Minneapolis, Piper Jaffray has 25 offices across the United States and international locations in London, Hong Kong, Shanghai and Beijing. Piper Jaffray & Co. is the firm's principal operating subsidiary. (NYSE: PJC) (

Since 1895. Member SIPC and FINRA.

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