FDIC Launches Investor Match Program

The Federal Deposit Insurance Corporation (FDIC) has launched a new program to encourage small investors and asset managers to partner with larger investors to participate in the FDIC’s structured transaction sales for loans and other assets from failed banks.

The Investor Match Program will help to facilitate partnerships in order to bring together sources of capital and expertise. Participants in the program will use a customized database to identify potential collaborations, which will be identified at the sole discretion of the participating firms.

The FDIC believes in the value of facilitating a cooperative solution between large investors and small investors and asset managers. The goal of the Investor Match Program is to expand opportunities for participation by smaller investors and asset managers, including minority and women-owned (MWO) firms, in FDIC structured sales transactions. The program has additional goals that include knowledge transfer and increased effectiveness of execution by small investors and asset managers via enhanced organizational competencies.

“The program is an example of our commitment to ensure that the structured sales transaction process is inclusive of all firms large and small. We believe that expanding the investor pool will assist in minimizing losses to the Deposit Insurance Fund (DIF). This innovative strategy will leverage technology to more effectively dispose of assets that the FDIC has inherited through failed bank receiverships,” said Pamela Farwig, Deputy Director, Division of Resolutions and Receiverships.

The Investor Match Program, part of a larger effort to expand outreach efforts with small investors, is executed via an automated online networking platform. The networking platform enables participants to identify potential partners and provides a forum to connect with them.

The FDIC strongly encourages all potential investors, especially small, minority- and women-owned investors to register for the Investor Match Program today. To participate in the Investor Match Program, every investor must be pre-qualified to bid in FDIC structured sales transactions. Go to: http://www.fdic.gov/buying/financial/investormatchprogram.html to learn more about the Investor Match Program, pre-qualification process and to pre-qualify. Once pre-qualified, you will be invited by an email notification to be a part of the Investor Match Program.

The FDIC’s structured transactions are one of several strategies used to sell assets retained from failed banks. Loans and real estate are transferred to a Limited Liability Company (LLC). The FDIC then sells an equity stake in the LLC to an investor.

The investor is responsible for managing the LLC and working the assets to maximize their value. This technique allows the FDIC to capture any potential future upside from the assets. The dollar amount of the assets sold range from several hundred million to well over a billion dollars. The Investor Match Program opens the door to investors who otherwise would not have the resources necessary to participate in such sales.

Background

The FDIC continues to proactively expand its outreach efforts to encourage participation of small, minority and women-owned (MWO) investors in FDIC asset sales programs.

In 2010, the FDIC hosted eight Asset Purchaser, Investor, and Minority Depository Institutions Outreach Seminars designed for small and MWO firms including: fixed income managers, hedge fund managers, private equity investors, real estate investors and developers, broker dealers, other financial service investors and asset purchasers.  These seminars provided information about the types of assets the FDIC has for sale, the various methods used to sell assets, how to become pre-qualified as a potential investor or asset purchaser, and the types of sales and investor opportunities/programs available.

Feedback gathered from these seminars as well as from many conversations with small and MWO investors and asset managers indicates a need for these firms to build consortiums or develop partnerships with other investors in order to enhance qualifications and participate in FDIC structured sales programs.

In response to this feedback, the FDIC has developed the Investor Match Program to encourage and facilitate interaction between small and MWO investors, asset managers and large investors to bring sources of capital together with the expertise needed to participate in structured sales programs.  The Investor Match Program is executed via an automated online networking system.

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