BB&T, Sanwa Set Up Venture Capital Companies
Nathan, Sara, American Banker
BB&T Corp. and Sanwa Bank said they have created venture capital units to make equity investments in growing businesses.
BB&T Capital Partners, a subsidiary of the Winston-Salem, N.C., banking company with $40 million of capital, will make investments of $1 million to $5 million in small businesses in the Southeast.
The unit will make equity and subordinated debt investments for five to seven years and expects to generate annual returns of 25% to 30%, said David Townsend, managing partner of BB&T Capital.
"This is one type of capital that has been available to large corporations but is just working its way down to small businesses," Mr. Townsend said.
Sanwa's venture capital unit, Chicago-based SBC Equity Partners, was started with $50 million of capital and will make equity investments of about $5 million in businesses in the Upper Midwest, said Robert A. Schriesheim, president and chief executive officer of SBC Equity Partners.
Mr. Schriesheim said the unit was created to generate strong returns rather than enhance relationships with bank customers. But he said he also hopes for referrals from Sanwa lenders.
The two banks' creation of venture capital units last month is one of the latest signs of a resurgence in the formation of such firms. …