US-based banker of Indian origin Jay Sidhu, who led the rise of Sovereign Bancorp into one of the largest US regional banks before being ousted from the organisation, has acquired a controlling stake in New Century Bank, a Pennsylvania-based community bank. Sidhu, who had been leading Sidhu Advisors, a private equity and financial services consulting company, raised $13.6 million from friends and family for the transaction.
New Century Bank has $265.1 million of assets and five branches. The bank raised $13.6 million from a private placement of common stock. Sidhu joined New Century's board of directors last month.
This deal marks a come back of sorts for Sidhu in the banking industry after he was ousted from Sovereign Bancorp in the year 2006 after a major power struggle.
His role at Sovereign Bancorp ended shortly after he sold 20% of the bank to Spain's Banco Santander SA. He was targeted by investors leading to a proxy battle in which he lost at the end. One of the key shareholders of Sovereign Bancorp he left with a kitty of $44 million, which was partly used for the New Century deal.
Not to be mellowed down by previous experience, Sidhu is once again looking at growth through acquisitions, hoping to quadruple the assets to $1 billion in three to five years time. But this should not be considered just kite flying. Sidhu had earlier built the assets of Sovereign Bancorp from just $0.5 billion in assets in 1986 to over $90 billion just before he exited two decades later.
The growth was largely attributed to the M&A prowess and aggressive expansion scripted by Sidhu.
Sidhu was also on the verge of floating a blank cheque company in the US to raise $150 million in March 2008. But the fall in global financial markets last year post the sub prime crisis spoilt the plans. He also pursued a $30 million deal last year to acquire Federal Trust Corp, a bank-holding company with 11 branches. But he backed out from the deal when the state of markets turned for the worse.
Acoording to a report in Wall Street Journal, Sidhu is looking to raise cash worth $100 million from private-equity firms and other investors to scale New Century Bank. He expects to strike a deal within the next three months to expand New Century's branches and is eyeing banks in other parts of the US as potential candidates for M&A.