Hedge Funds in Talks to Purchase Failed Mortgage Lender IndyMac

Date: Wednesday, December 31, 2008
Author: Julie Scuderi, Senior Editor for HedgeCo.Net

Several hedge fund firms led by J.C. Flowers & Co., are closing in on a deal to purchase the assets of IndyMac, the failed mortgage lender, as of Sunday.

The group of firms, which also include Paulson & Co. and Dune Capital Management, would buy the bank’s 33 branches, along with its $176 billion loan-servicing portfolio and its reverse-mortgage unit.

The IndyMac Bank unit was seized by regulators in July after clients moved to withdrawal $1.3 billion in cash in little over a week.  The result was one of the worst U.S. bank failures in history, from a firm who managed $32 billion in assets.

Paulson & Co. is a New York-based hedge fund run by famed manager John Paulson.  In the midst of one of the worst years for hedge funds to date, Paulson’s funds have managed to reap consistent returns.

Dune Capital Management is a New York-based private equity firm, founded in 2004 by ex-Goldman employees Steven Mnuchin and Daniel Niedich.

J.C. Flowers & Co., another New York-based firm, was founded in 2001 by billionaire J. Christopher Flowers, also formerly of Goldman.  In 2007, the company was close to purchasing loan servicer Sallie Mae for $25 billion.

The Federal Deposit Insurance Corp is being advised on the sale by Barclays Capital and Deutsche Bank.  A deal is expected to be finalized by the end of this year.

Julie Scuderi
Senior Editor for HedgeCo.Net
Email: julie@hedgeco.net