Castle Creek Closes Fund IV At $331.1M

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Firm: Castle Creek Capital LLC

Fund: Castle Creek Capital Partners Fund IV LP

Amount Raised: $331.1 Million

Target: $500 Million

Placement Agent: Thomas Capital Group Inc.

Castle Creek Capital LLC has wrapped fundraising on its fourth fund, a $331.1 million pool that the firm has earmarked to make non-control investments in troubled community banks.

After more than 22 months of fundraising—its first sale was in March 2009—the firm was well short of the $500 million target that it reported in a regulatory filing.

The Rancho Santa Fe, Calif., buyout shop held its final close on Castle Creek Capital Partners Fund IV LP on Dec. 23, raising $324.5 from outside investors and a commitment of $6.6 million by the general partner, according to a spokeswoman for the firm. The firm’s prior fund, the 2006-vintage Castle Creek Capital Partners Fund III LP, raised $175 million for buyouts, according to Thomson Reuters, publisher of Buyouts.

Castle Creek specializes in recapitalization, growth equity, and buyout investments in U.S.-based community banks with assets of less than $10 billion. The firm has typically taken ownership positions of less than 25 percent in its targets, often in conjunction with other investors, in order to avoid the regulatory paperwork and cross-capitalization requirements that take effect at that point. An investor owning more than 25 percent of a bank is considered a bank holding company under U.S. law.

Fund IV investments include seven unrealized investments, all of them community banks, according to the firm’s Web site. They include the privately held, $1.4 billion-asset Heritage Commerce Corp. in San Jose, Calif.; the $1.1 billion-asset business bank Square 1 Financial, in Raleigh-Durham, N.C.; the $605 million-asset The BANKshares Inc. in Melbourne, Fla., along with publicly traded holding companies, including the $2.1 billion Guaranty Bancorp in Denver, Colo.; the $950 million-asset Heritage Oaks Bancorp, in Paso Robles, Calif.; and the $2.7 billion West Coast Bancorp in Lake Oswego, Ore. Castle Creek also holds a “shelf charter” for a bank holding company, Carlile Bancshares LLC, to acquire community banks.

Investors include the Arizona Public Safety Personnel Retirement System, according to Thomson Reuters. Philadelphia-based Patriot Financial Partners LP was a co-investor in Fund III.

Thomas Capital Group Inc. of Gig Harbor, Wash., acted as placement agent for the fund.