A “Joint Venture Transaction” is a partnership between the FDIC as receiver for one or more failed banks and a private sector partner. The partnership facilitates the disposition of failed bank assets, typically real estate-secured loans. The partner and the receiver have a financial interest in the assets. The private sector partner has responsibility for day-to-day management of the assets. Both share in the risks and costs associated with the disposition of the assets.
Joint Venture Transaction Event(s)
| Description | Date(s) | Location |
|---|---|---|
| There are no joint venture transaction event announcements at this time. | ||
Mechanics of a Joint Venture Transaction
The FDIC as receiver forms a limited liability company (LLC), conveys assets from one or more failed banks to the LLC and becomes the owner of all the equity in the LLC. A portion of the equity in the LLC, typically 20-40 percent, is offered in a sealed-bid auction. The FDIC may offer an interest in the joint venture transaction on a leveraged or unleveraged basis. The winning bidder becomes the private sector partner.
Notification and Qualification
Parties interested in participating in joint venture transactions may request that they be included on a list of “prospective bidders” to receive sale announcements. Once a sale is announced, prospective bidders will be required to meet qualification criteria specific to the transaction to gain access to due diligence material. Prospective bidders must also demonstrate their financial capacity and expertise in managing and disposing of asset portfolios as an additional qualification to bid.
Notification
Learn more about how to receive notification of joint venture transaction opportunities.
Transaction-Specific Qualification
Learn more about the requirements to receive information on a specific joint venture transaction.
Bidder Qualification
Learn more about the criteria to be eligible to a bid in a joint venture transaction.
Closed Joint Venture Transactions
Find closed joint venture transaction information from 2008 to present.
FDIC Closed Joint Venture Transactions
Frequently Asked Questions
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| Questions and Answers |
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| Is a joint venture transaction an appropriate investment for me? Every interested party, based on its own circumstances, must determine whether participating in a joint venture transaction is a suitable investment. Prospective purchasers must have the financial sophistication and resources sufficient to evaluate and bear the economic risks of this type of investment as well as the requisite expertise to manage the venture. |
| How do I receive notification of FDIC joint venture transactions? Parties interested in joint venture transactions must complete the Prospective Bidder Information form, including their investor status, in order to receive notice of upcoming transactions. |
| What types of loans are included in joint venture transactions? The most common loan types in these transactions are loans secured by commercial or residential real estate, including acquisition, development, and constructions loans. |
| What criteria does the FDIC consider when pooling loans to be conveyed into a joint venture transaction? Typically, a joint venture transaction contains a large volume of loans with a substantial aggregate unpaid principal balance (e.g., in excess of $100 million) with similar characteristics or that meet specific criteria. Pooling considerations may include performance status, loan type, loan size, and collateral type and location. |
| Is a ‘joint venture transaction’ the same as a ‘structured transaction’? Yes, the FDIC previously used the terminology ‘structured transaction’ to describe what is now referred to as a ‘joint venture transaction.’ |
How does a joint venture transaction work?
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How does a leveraged transaction work?
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| Who manages the assets? The private owner is also the manager of the LLC and is responsible for the management and servicing of the assets conveyed to the LLC. The manager enters into a servicing agreement with a qualified servicer to service the assets in a manner consistent with industry standards and to maximize their value to the joint venture. The private owner receives a monthly management fee, which is specific to each transaction and is disclosed to bidders prior to the bid date. Except for the management fee and certain reimbursable administrative expenses, the private owner, and not the LLC, bears the cost of overhead and administrative fees. |
| What type of oversight does the FDIC have? The FDIC has monitoring and oversight rights pursuant to the joint venture legal agreements. The private owner is required to deliver periodic financial statements, and monthly cash and financial reports to the FDIC. In addition, the FDIC engages third party contractors to perform periodic compliance reviews to test the private owner’s adherence to legal agreement provisions governing asset, financial, and business management activities of the LLC. |
| Are borrowers affected when their loan is conveyed in a joint venture transaction? The documents governing the legal rights and obligations of borrowers do not change when their loans are conveyed in a joint venture transaction. |
| Does the FDIC also give bidders the option to purchase these pools on a whole-loan all cash basis? At FDIC’s discretion, pools proposed to be conveyed to a joint venture transaction may also be offered separately on a whole-loan all cash basis. In such a case, bidders may bid to acquire the whole loans and/or an interest in the joint venture. |
| Are the legal documents for past joint venture transactions available? Yes, the primary legal documents for past joint venture transactions are available at the following link: Historical Joint Venture Transactions |