Soros-Backed OneWest Said to Plan $1 Billion Dividend Before IPO

OneWest Bank FSB, the lender formerly known as IndyMac Bancorp Inc., plans to pay a $1 billion dividend to backers including George Soros and John Paulson ahead of an initial public offering next year, two people with knowledge of the matter said.

The payout, which regulators still have to approve, would return most of the money a group invested in OneWest as it acquired IndyMac from the Federal Deposit Insurance Corp. in 2009, said the people, who asked not to be identified because the plans are private. The dividend could also improve the Pasadena, California-based return on equity by trimming excess capital, the people said.

OneWest Chief Executive Officer Steve Mnuchin raised $1.55 billion to acquire IndyMac after the FDIC seized the subprime-mortgage lender in July 2008. OneWest returned at least $500 million to the investor group in a dividend paid in the fourth quarter, according to a letter that Paulson sent in January to investors in his firm, Paulson & Co. Dell Inc. founder Michael Dell and private-equity fund manager J. Christopher Flowers also own stakes in OneWest.

The lender tried to find a buyer earlier this year and held informal talks with companies including UnionBanCal Corp. and U.S. Bancorp, people familiar with the matter said in February. It is now preparing for an IPO, two people said.

David Isaacs, a spokesman for OneWest, declined to comment yesterday as did Michael Vachon, a spokesman for Soros Fund Management LLC. Spokesmen for Paulson, MSD Capital LP, which helps manage Michael Dell’s personal fortune, and JC Flowers & Co., didn’t return phone calls seeking comment.

Bank Turnaround

IndyMac’s is the second largest U.S. commercial bank failure on record, behind the collapse of Washington Mutual Inc., according FDIC data. OneWest, which has acquired two other failed lenders in California since it was established, had assets of $25 billion at June 30, up from $16 billion in 2009. Its branches have more than doubled.

Its turnaround prompted protests outside of the home of CEO Mnuchin, with critics alleging the bank profited at the expense of homeowners. Mnuchin has said the allegations stem from a misunderstanding of the terms of the IndyMac deal.

The bank, which primarily makes home loans, reported $183 million in net income for the first six months of 2013, a 14 percent increase from a year earlier, according to the FDIC. It had $4.2 billion in equity as of June.

OneWest’s return on equity, a measure of how efficiently a company uses shareholders funds, was 8.9 percent in the first six months of 2013, FDIC data show. That compares with an average of 10.4 percent for the average bank with at least $10 billion in assets, the data show.

To contact the reporter on this story: Matthew Monks in New York at mmonks1@bloomberg.net

To contact the editor responsible for this story: Jeffrey McCracken at jmccracken3@bloomberg.net

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