The Associated Press May 24, 2010, 2:57PM ET

Warburg Pincus invests $139M in Sterling Financial

Pincus Private Equity X will invest $139 million to support the recapitalization and recovery plan of Sterling Financial Corp.

Sterling Financial, the bank holding company of Sterling Savings Bank and Golf Savings Bank, said Monday that the deal gives Warburg Pincus an ownership stake of about 20.5 percent.

In addition, the agreement would add Warburg Pincus Managing Director David A. Coulter to the board of directors.

Thomas H. Lee Partners agreed to adjust the size of its proposed investment of about $170 million to an amount equal to the Warburg Pincus investment.

Upon the closing, the two firms will invest a total of $278 million and hold an ownership interest of about 40 percent of Sterling.

The deals are subject to the approval of the U.S. Treasury and the other conditions.

The investments come as Sterling tries to meet the terms of an exchange agreement with the Treasury to convert the government's preferred shares into common stock.

The Treasury stepped in to shore up banks during the worst of the financial crises, taking a stake in many of them.

Sterling must raise $720 million including the Warburg Pincus and THL investments and a previously announced capital raise, and meet regulatory capital requirements.

Sterling Financial operates 179 branches throughout Washington, Oregon, Idaho, Montana and California.

Warburg Pincus, a global private equity firm, has more than $30 billion in assets under management. Its 12 private equity funds have invested more than $35 billion in about 600 companies in more than 30 countries.

Shares of Sterling Financial rose 15 cents, or 20 percent, to 90 cents. They have traded between 43 cents and $4.74 in the past year.


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