Tennessee firm acquires 30 percent stake in BHG for $75 million

Pinnacle Financial Partners, Inc. (NASDAQ: PNFP) announced that its subsidiary, Pinnacle Bank, has acquired a 30 percent interest in Bankers Healthcare Group, LLC (BHG), a privately held company with operations in Syracuse, for $75 million.

 

Nashville–based Pinnacle made the announcement in a news release posted on its website Wednesday.

 

Davie, Fla.–based BHG is a provider of financing for health-care professionals across the U.S. The firm’s financial headquarters are located at 201 Solar St. in Syracuse. It employed about 70 people there, as of last June, according to a June 20, 2014 article in The Central New York Business Journal.

 

BHG’s loan originations are sourced through a variety of distribution channels and primarily sold through an online-auction process to a network of about 200 community banks, according to the Pinnacle news release.

 

BHG generated revenue of about $98 million in 2014, with pretax income of about $49 million, Pinnacle said.

 

As part of the investment, Pinnacle will get to name one member of BHG’s four-person board of directors.

 

BHG’s other three founders and executive officers will retain a 70 percent ownership interest in BHG and have contractually agreed to remain with the firm for an “extended period of time,” Pinnacle said.

 

BHG’s reputation in the medical community, growth trajectory, and “solid” leadership make for a “strong” partnership,” M. Terry Turner, Pinnacle’s president and CEO, said in the news release.

 

“We have enjoyed partnering with BHG over the last few years on several initiatives and look forward to working more closely together. We are particularly excited about incremental potential to distribute our financial services through their national distribution channel. While Pinnacle’s affiliation has the potential to have a modest impact on our balance-sheet volumes, the investment primarily will serve to increase and diversify our fee income, which has been an important strategic objective for our firm,” said Turner.

 

BHG is “very excited” about its affiliation with Pinnacle, Al Crawford, BHG’s CEO and one of its three founders, said in the release. “We believe that, as a result of this partnership, we will be even better positioned to continue the growth and profitability we have enjoyed. We look forward to exploring new opportunities that are available to both firms.”

 

Pinnacle expects that the investment will add about 7 to 9 percent to the firm’s estimated earnings per share in this year. It funded the investment through a combination of cash and bank debt, the Tennessee–based firm said.

 

Sandler O’Neill + Partners, L.P., a New York City–based investment-banking firm, served as financial advisor to Pinnacle Financial Partners and Pinnacle Bank in the transaction.

 

Pinnacle Financial Partners provides a range of banking, investment, trust, mortgage and insurance products and services designed for businesses, their owners, and individuals interested in a “comprehensive relationship with their financial institution.”

 

Launched in 2000, Pinnacle currently has about $6 billion in assets, as of Dec. 31, 2014, according to its news release.