Two stars of fund finance help launch new TIAA Bank unit

Two of the most well-known names in fund finance have resurfaced at a new banking unit looking to compete in the market, according to people familiar with the matter, more than a year after they left their respective jobs to launch a new venture together.

Former Cadwalader fund finance lawyer, Michael Mascia, and former head of Wells Fargo’s subscription credit line business, Jeff Johnston, started at EverBank’s new Charlotte, North Carolina office on Monday, at least unofficially. Jacksonville, Florida-based EverBank is still in the process of closing a transaction, backed by a consortium of private equity firms, to carve out and purchase TIAA’s banking unit. TIAA Bank announced that it will rebrand under the EverBank name post-close, after a media leak caused the bank to rush out an announcement, according to one of the sources.

The transaction is expected to close as early as July 31.

Mascia and Johnston have been acting as consultants for the consortium of private equity funds that struck a deal to buy the banking unit, helping to evaluate the purchase and devise a business plan for the new entity. The consortium includes Stone Point Capital, Warburg Pincus, Reverence Capital Partners, Sixth Street and Bayview Asset Management.

The two fund finance vets now share the title of co-leader of TIAA Bank’s fund finance team. That unit will comprise 10 people in all, according to one of the sources.

“They must have hired up a storm,” said one future competitor of the unit. “Awesome for them! I know [this] was months in the making.”

The newly-created unit is aiming to be active in various fund finance formats, not just sub lines, but it could not be determined exactly what strategies the bank has planned.

TIAA has thousands of staffers on its Charlotte campus. More than 100 of those in the banking unit have been moved to a different office in Charlotte’s SouthPark area.

Johnston and Mascia’s reappearance has big potential implications for the fund finance market. Johnston is the Fund Finance Association’s current chair, and Mascia is its secretary. Both are considered to be among the informal founders of the subscription credit line industry, which now anecdotally measures more than $800 billion – up from an estimated $500 billion in 2020.

Their long-time presence and influence in the market could represent an advantage as new lenders quickly emerge to fill a void left by the fall or rescue acquisition of three of the most active banks in the sector: Silicon Valley Bank, Signature Bank and First Republic Bank. Competition has heated up, as many employees of those banks have since popped up at new players, including Axos Bank, Citizens Bank and First Citizens Bank. A handful of other would-be lenders are also trying to hire or otherwise considering platforms.

But the opening up of yet another new balance sheet will help to ameliorate a persistent supply shortage in those facilities since the war in Ukraine, global economic uncertainty, rising rates and internal market dynamics have caused many otherwise active banks to reel in new lending.

The TIAA Bank project appears to be an altogether different venture than the one Mascia and Johnston set out to build. Private Funds CFO reported in March of last year that the two had left their employers to build a NAV finance-focused business to compete with the likes of 17Capital. At the time, they were said to be looking for capital partners with an eye to launching a platform within a matter of several months.

TIAA Bank did not respond to a request for comment.