May 24, 2010 in Business

Equity firm to invest $139 million in Sterling

By The Spokesman-Review

A Wall Street private equity firm has agreed to invest $139 million in Sterling Financial Corp. as the Spokane bank holding company continues its recapitalization effort.

Warburg Pincus Private Equity X, L.P. would own 20.5 percent of Sterling if the company successfully completes its $720 million plan to raise enough capital to satisfy regulator requirements.

Warburg Pincus would own Sterling common and preferred stock.

Thomas H. Lee Partners, which had earlier announced a $170 million investment in Sterling, would roll that amount back to the equivalent of the Warburg Pincus investment.

Both investments, and participation by the U.S. Treasury, are subject to completion of the recapitalization plan, regulatory approvals, stabilization of Sterling assets and capital levels, and other conditions.

Warburg Pincus would be represented on the Sterling board of directors by Managing Director David Coulter, a former chairman and chief executive officer of BankAmerica and vice chairman of JP Morgan Chase.

Coulter is the co-head of Warburg Pincus Financial Services investment activities, which include holdings in multiple financial institutions.

Warburg Pincus manages more than $30 billion in assets.

In mid-afternoon trading, Sterling shares were up 20 percent, to 90 cents, on trading volume of 4.8 million shares, twice the daily average.

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