Corsair Capital Sails Into Cleveland

Originally Published In the News April 21 2008 11:40 AM
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The $7 billion capital injection into National City Corporation (NCC-NYSE) is throwing cold water on the recent rally in financial stocks. The move should shore up confidence in the bank; counterparties have been reticent to do business with them of late, but the they will remain a going concern, although the dilution to equity holders from the convertible tranche of the offering is material:

National City Corp., Ohio’s biggest bank and subprime lender, slumped in New York trading after it slashed the dividend and agreed to sell a $7 billion stake to a group of investors led by Corsair Capital LLC at a 40 percent discount to last week’s closing price.....``The situation at National City is very tough,’’ said Richard Bove, an analyst at Punk Ziegel & Co. in Lutz, Florida. ``The issue people are worrying about is will it go under. I don’t think that will happen now.’’ He rates the stock ``market perform.’’ Bloomberg

Although Corsair Capital is not well known, their expertise with financials provided the credibility to lead the capital raise, allowing private equity firms an opportunity to put some money to work and justify their existence.

With a pro-forma book value slightly above $7 a share, National City might finally offer a safe entry point for investors looking to invest for the long term. No fast money here, but the bleeding has been staunched.

National City to Get $7 Billion Infusion After Loss
Bloomberg
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