If you live and work in the Dallas, Texas area, and you are running your own business, then you are probably familiar with the financial services company known as NexBank Capital. A few months ago NexBank completed a 54 million dollar private placement. A private placement can be best described as an IPO where the ‘P’ stands for private not public. The private placement notes are usually offered to accredited investors that consist of other institutions or high net worth individuals with incomes over 100 million dollars.
The company was able to do this offering fixed to floating rate subordinated notes, or notes that have rates that possibly increase over time and also pay out quarterly to its interested high net worth investors. These notes cannot be bought or sold for 5 years, but they have an interest rate of 6.375% for those five years, after which the floating-rate phase of the notes come into play, and those note rates can be raised according to rising market rates. Those rates are based on a spread of a three month LIBOR above 458.5 interest points, which means that it adjusts according to the current rates provided by banks in London. These tier 2 capital notes have a BBB- rating and they mature September 30th, 2027.
Including this 54 million addition, NexBank Capital Inc. has raised 283 million dollars of capital since 2016. The placement was executed by Sandler O’Neill & partners LLP, and its closing was completed September 19th, 2017.
In case you are not familiar with this bank and you don’t live in Dallas, then you should know that NexBank Capital specializes in providing financial services to larger institutions such as other banks, institutions and corporations of all sizes. The main services that they provide for their clients are corporate lending, M&A, investment banking, land advisory service and corporate finance.
NexBank Capital intends to use this capital for general business purposes and growth. Founded in 1922, NexBank was formerly known as Heritage Bank, but they changed their name in 2005.