LLR, Greenhill in $40m specialty finance deal

The Philadelphia private equity firm and the merchant banking arm of the investment bank Greenhill & Co. team up for another investment in the financial services industry, investing $40m for a minority stake in the specialty finance company.

Philadelphia-based private equity firm LLR Partners and New York-based merchant bank Greenhill Capital Partners have completed a $40 million (€31 million) minority, non-control investment in specialty finance company Peachtree Settlement Funding.

According to Mitchell Hollin, an LLR partner, both LLR and Greenhill will have representatives on the company’s board of directors, although LLR led the transaction and holds a larger stake in the company.

Based in Boca-Raton, Florida, Peachtree provides lump sum payments to owners of structured legal settlements, lottery prizes and life insurance policies. The company was founded by company president Tim Trankina and is currently run by chief executive officer James Terlizzi. Hollin noted that Trankina and the rest of Peachtree management are the majority shareholders in the company. He added that the private equity firms hope to expand the business through organic growth in new and existing product lines as well as through potential acquisitions.

Greenhill and LLR have worked together in the past in the financial services sector. According to Hollin, the two firm’s first joint transaction was a $40 million investment in credit card processor Heartland Payment Systems in 2001. In addition to Heartland, LLR currently owns two companies in the financial services industry, late stage private equity investors LVIR Investor Group and venture capital fund New Spring Ventures. In 2003, Greenhill completed a $48 million investment in Republic Insurance Group, a Texas-based property and casualty insurance company.

Earlier this month, LLR Partners closed its second fund on $360 million, which contributed the bulk of the firm’s investment in Peachtree. A portion of the investment was also made from LLR’s first fund which closed on $260 million in 1999.

Greenhill Capital Partners is the merchant banking arm of investment bank Greenhill & Co., which was founded in 1996 by Robert Greenhill, former president of Morgan Stanley and former chairman and chief executive of Smith Barney. Greenhill Capital currently manages a $423 million private equity fund of which $85 million comes from the managing directors and professionals of Greenhill & Co. The investment bank, which went public in May 2004, is currently valued at approximately $1 billion.