Affordable Housing Finance

NEW DIRECTIONS

PNC Unloads Red Capital

AFFORDABLE HOUSING FINANCE • June 2010

Red Capital Group has come back to its roots as an entrepreneurial firm after being acquired by an investment group led by ORIX USA Corp. and Stonehenge Partners.

Red Capital had been the property of PNC Bank since December 2008, when PNC acquired Red Capital’s parent company, National City Corp. But there was signifi cant overlap between Red Capital and PNC’s agency lending efforts, and as a result, the two units made for strange bedfellows.

“I expected that at some point PNC would look to divest itself of Red,” says William Roberts, who was named Red Capital’s CEO after the transaction closed. “It never seemed to me that Red could be integrated effectively with PNC Real Estate, which, when it comes to agency executions, is organized around the business formerly known as ARCS.”

Roberts founded Red Capital and served as its CEO from 1995 to 2007. And the deal’s other players were also very familiar with the firm, which began life as a subsidiary of Banc One Corp. in 1990.

During his 10-year tenure at Banc One Capital Markets, Roberts worked with David Meuse, now a principal at Columbus, Ohio-based Stonehenge Partners. And while at Banc One, Roberts and Meuse arranged a joint venture with ORIX, called Banc One Mortgage Capital, where Roberts served as co-chairman along with Jim Thompson, now CEO of ORIX USA.

“The opportunity to co-invest with Stonehenge Partners in the transaction was especially meaningful as ORIX Capital Markets was at one time a joint venture involving many of the principals of Stonehenge and Banc One,” Thompson says.

The Columbus-based Red Capital plans to expand on its deep background in seniors, health care, and affordable housing debt and equity transactions, including Fannie Mae, Federal Housing Administration, and taxexempt bond deals. The firm employs about 200 individuals, with origination offices in San Diego; Newport Beach, Calif.; Chicago; Dallas; Boston; Charlotte, N.C.; Nashville, Tenn.; and Reston, Va.

“We will look to expand in certain geographies and will look to re-launch certain activities that were shuttered over the past year or two,” Roberts says.

Terms of the transaction were not disclosed, and a PNC spokesman said the company had no comment.