Saturday, July 4, 2015

Philly lenders score in rare venture-capital bank IPO

Square 1 Bank turns $20M from 2007 into $85M in shares and cash

Philly lenders score in rare venture-capital bank IPO

A screen grab from Patriot Financial´s web site.
A screen grab from Patriot Financial's web site.

Patriot Financial Manager LP, the Philadelphia-based bank investment fund set up by veteran local lenders James J. Lynch and W. Kirk Wycoff with partner Ira Lubert in 2007, said today that it grossed $9.3 million from its initial sale of shares in the March 31 initial public stock offering of (IPO) of Square 1 Financial Inc., a Durham, N.C.-based that specializes in servicing venture capital firms across the U.S.

Square 1 is one of just 15 U.S. banks to go public since the 2008 financial crisis, says Michael Foley, an analyst at Patriot. "Of these 15 IPOs, Square 1 had the highest offering price/tangible book value ratio," a popular bank-stock value metric, he told me. That's "a testament to the quality of the company and the investment community’s interest 

Square 1 "is very much like Silicon Valley Bank," a California-based company that finances and raises deposits from venture capital firm and venture-capital-backed companies, "just a smaller size," Wycoff, the Patriot partner, told me. 

Patriot sold a total of 5.8 million shares of  Square 1 (Nasdaq syumbol: SQBK) at $18/share on March 31, and still holds 3.2 million shares and 750,000 share warrants, worth around $76 million at Square 1's first-day closing price of $20.10/share.

Since Patriot invested a total of $20.4 million in Square 1, if the firm is able to sell its shares at recent prices, it will have more than quadrupled clients' money with that part of their investment, since 2007.

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PhillyDeals posts drafts, transcripts and updates of Joseph N. DiStefano's columns and stories about Philly-area business, which he's been writing since 1989.

DiStefano studied economics, history and a little engineering at Penn and taught writing at St. Joseph's. He has written thousands of columns and articles for the Inquirer, Bloomberg and other media, wrote the book Comcasted, and raised six children with his wife, who is a saint.

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