Amalgamated Bank, the union-owned bank rescued six years ago by U.S. Commerce Secretary Wilbur Ross, has filed for an initial public offering. The purpose of the IPO is so Ross and another private-equity investor, billionaire Ron Burkle, can cash out their stakes.
“The selling stockholders are selling all of the shares of common stock in this offering and we will not receive any proceeds from the sale of shares of our common stock by the selling stockholders,” Amalgamated said in its prospectus filed today.
It isn’t clear how many shares Ross and Burkle will sell or what the market price will be for a bank whose mission goes beyond traditional profit and loss. Amalgamated has enlisted Barclays, JPMorgan and Keefe Bruyette & Woods to market its IPO, which comes as bank stocks have risen to levels last seen just before the financial crisis.
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The bank has $350 million in net worth, or book value. At the moment, shares in small banks trade for an average of 1.7 times book value, according to KBW. Assuming Amalgamated trades in line with peers after its IPO, the Ross and Burkle stakes would each be worth $100 million, and the private equity investors would have doubled their money in just six years.
Amalgamated was founded in 1923 by the Amalgamated Clothing Workers of America and has $4 billion in assets. It is majority-owned by Workers United, a Service Employees International Union affiliate, and proudly displays its political leanings. It was the go-to bank for Barack Obama’s second presidential inaugural committee, handled Occupy Wall Street’s money, and in 2015 was the first bank to raise its minimum wage to $15 an hour.
Ross entered the picture in 2012 after Amalgamated nearly went bust from a teetering tower of dud loans. Ross, who made his reputation on Wall Street turning around struggling coal-mining companies and steel manufacturers, injected $50 million, as did Burkle’s Yucaipa Cos., to recapitalize the bank. Officials insisted Ross, who resigned from his private equity firm to become a cabinet secretary, never interfered with the institution’s progressive mission even after joining the Trump administration.
Chief Executive Keith Mestrich, a former SEIU financial executive, nursed Amalgamated back to health and has been making acquisitions. Earlier this year the bank paid $58.5 million for San Francisco-based New Resource Bancorp, creating what was described as the largest “values-based” bank in the U.S. Amalgamated is a certified B Corp, which recognizes its commitment to social and environmental responsibility.