By Karey Wutkowski and Jennifer Ablan
WASHINGTON/NEW YORK, Sept 30 (Reuters) - The first two funds involved in the U.S. government's plan to purchase toxic assets have raised about $1.13 billion in private capital, the Treasury Department said on Wednesday.
Invesco Ltd and Trust Company of the West, or TCW, are the first of the so-called Public-Private Investment Funds to raise the necessary capital to launch the program.
Treasury said it expects the seven other funds will complete their initial closings by the end of October.
The launch of the program comes nearly a year after the U.S. Congress authorized a $700 billion fund to cleanse banks' balance sheets of toxic assets. Officials shifted away from that idea and switched its focus to directly injecting capital into the banks.
The Public-Private Investment Program, or PPIP, has been dramatically scaled back to a $40 billion program as banks have proven that they can raise capital in the private markets without first unloading troubled assets, many of which are tied to bad mortgages.
'I am pleased with the progress we have made in launching PPIP,' Treasury Secretary Timothy Geithner said in a statement. 'This program allows Treasury to partner with leading investment management firms to increase the flow of private capital into the market for legacy securities and give taxpayers a chance to share in the profits.'
The Treasury said the two funds' $1.13 billion of private-sector capital commitments will be matched by the government.
Treasury will also provide debt financing for up to 100 percent of the total capital commitments of each fund, representing about $4.52 billion of total equity and debt capital commitments for the first two funds.
Invesco raised the minimum-required initial amount of $500 million while TCW raised the remainder of the $1.13 billion, according to a source familiar with the matter who asked not to be named.
The rest of the funds have until Oct. 8 to raise their required initial capital amounts.
In July, the Treasury named nine fund managers to run the partnerships for securities purchases. A parallel program run by the Federal Deposit Insurance Corp to auction whole loans to investors is still in a pilot stage.
The seven other managers chosen to launch fund-raising efforts were: Alliance Bernstein LP; Angelo Gordon & Co LP with GE Capital Real Estate; BlackRock Inc (BLK, US); Marathon Asset Management LP; Oaktree Capital Management LP; RLJ Western Asset Management LP and Wellington Management Company LLP.
((Reporting by Karey Wutkowski in Washington and Jennifer Ablan in New York, additional reporting by Doug Palmer; Editing by Gary Crosse))
((karey.wutkowski@thomsonreuters.com; +1-202-898-8374)) Keywords: FINANCIAL/BAILOUT PPIP (Multimedia versions of Reuters Top News are now available for: * 3000 Xtra: visit http://topnews.session.rservices.com * BridgeStation: view story .134 For more information on Top News: http://topnews.reuters.com) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
WASHINGTON/NEW YORK, Sept 30 (Reuters) - The first two funds involved in the U.S. government's plan to purchase toxic assets have raised about $1.13 billion in private capital, the Treasury Department said on Wednesday.
Invesco Ltd and Trust Company of the West, or TCW, are the first of the so-called Public-Private Investment Funds to raise the necessary capital to launch the program.
Treasury said it expects the seven other funds will complete their initial closings by the end of October.
The launch of the program comes nearly a year after the U.S. Congress authorized a $700 billion fund to cleanse banks' balance sheets of toxic assets. Officials shifted away from that idea and switched its focus to directly injecting capital into the banks.
The Public-Private Investment Program, or PPIP, has been dramatically scaled back to a $40 billion program as banks have proven that they can raise capital in the private markets without first unloading troubled assets, many of which are tied to bad mortgages.
'I am pleased with the progress we have made in launching PPIP,' Treasury Secretary Timothy Geithner said in a statement. 'This program allows Treasury to partner with leading investment management firms to increase the flow of private capital into the market for legacy securities and give taxpayers a chance to share in the profits.'
The Treasury said the two funds' $1.13 billion of private-sector capital commitments will be matched by the government.
Treasury will also provide debt financing for up to 100 percent of the total capital commitments of each fund, representing about $4.52 billion of total equity and debt capital commitments for the first two funds.
Invesco raised the minimum-required initial amount of $500 million while TCW raised the remainder of the $1.13 billion, according to a source familiar with the matter who asked not to be named.
The rest of the funds have until Oct. 8 to raise their required initial capital amounts.
In July, the Treasury named nine fund managers to run the partnerships for securities purchases. A parallel program run by the Federal Deposit Insurance Corp to auction whole loans to investors is still in a pilot stage.
The seven other managers chosen to launch fund-raising efforts were: Alliance Bernstein LP; Angelo Gordon & Co LP with GE Capital Real Estate; BlackRock Inc (BLK, US); Marathon Asset Management LP; Oaktree Capital Management LP; RLJ Western Asset Management LP and Wellington Management Company LLP.
((Reporting by Karey Wutkowski in Washington and Jennifer Ablan in New York, additional reporting by Doug Palmer; Editing by Gary Crosse))
((karey.wutkowski@thomsonreuters.com; +1-202-898-8374)) Keywords: FINANCIAL/BAILOUT PPIP (Multimedia versions of Reuters Top News are now available for: * 3000 Xtra: visit http://topnews.session.rservices.com * BridgeStation: view story .134 For more information on Top News: http://topnews.reuters.com) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
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