John Paulson’s hedge funds made almost $1 billion on his investment in OneWest Bank, which is being purchased by CIT Group Inc. for $3.4 billion in cash and stock.
The $21.4 billion Paulson & Co. owns the investment through its Recovery Fund, which was created in October 2008, and a credit pool, according to a memo sent to clients. The funds spent $400 million to purchase a 24.9 percent stake in Pasadena, California-based OneWest in 2009. The sale values that stake at $788 million and Paulson also received $551 million in dividends. The total gain for the funds is $939 million.
The transaction will take six to nine months to close and Paulson & Co. will be restricted from trading the stock for six months, the firm wrote in the memo.
OneWest marks a big win for Paulson & Co.’s two funds this year, which have extended last year’s rebounds. The Paulson Recovery Fund is up 4.5 percent in 2014 after advancing 63 percent last year. The Paulson Credit Opportunities Fund climbed 8.9 percent this year after gaining 22 percent in 2013.
Other investors in the deal were Christopher Flowers, Dell Inc. founder Michael Dell and billionaire George Soros. Chris Gillick, a spokesman for Paulson & Co. with WalekPeppercomm, declined to comment on the gain.