US Banks: Can SPAC's Succeed Where PE Has Not?

Even as a combination of intransigency by the Federal Deposit Insurance Corporation (FDIC) and the unexpected stock market rally in the US could yet stifle significant investment in the US banking sector by the private equity (PE) industry, a new acquisition by a 'blank cheque' company in the US has raised the possibility of a new source of funding for those banks still in need of capital. Global Consumer Acquisition Corp (GCAC), a special purpose acquisition company (SPAC), confirmed on July 14 that it had acquired two Nevada community banks in what it called the largest such 'recapitalization of a banking company in U.S. history'. GCAC's new holding company, Western Liberty Bancorp, will acquire the Nevada branch operations of Alabama-based Colonial BancGroup and 1st Commerce Bank, a Nevada banking unit of Capital Bancorp. The combined company will have US$547mn of deposits, US$474mn of loan assets and 22 branches. The move comes hot on the heels of the recent deal by Liberty Acquisition Holdings, which agreed to take over British life insurer Pearl in a deal that provided a GBP510mn (US$843mn) cash injection.

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