Three private equity firms have closed on deals to buy mortgage-back securities with the assistance of the federal government, the Treasury Department announced.
AllianceBernstein LP, Blackrock Inc., and Wellington Management Co. LLP raised a total of $194 million to participate in the Public-Private Investment Program. Under the terms of the deal, Treasury will match their contributions and provide additional debt financing, bringing the total investment to as much as $7.4 billion.
"The PPIP continues to grow," Herb Allison, assistant Treasury secretary for financial stability, said in a statement. "Private capital is being drawn into the market for legacy securities, and taxpayers are being given a chance to share in the profits."
Last week, Treasury announced that two other firms, Invesco Ltd. and TCW Group Inc. had each invested $1.1 billion in the program and would likewise receive matching funds and financing.
Initially intended to spur liquidity in the market for toxic assets, the PPIP program has come under fire as demand for the securities has improved since last year's the financial meltdown. Some critics have questioned whether the assistance amounts to a giveaway to the financial industry.
Private equity firms and pension funds have certainly shown an improved interest in the program in recent weeks. The state of Connecticut has invested $100 million in Invesco's participation, which the Wall Street Journal reported has boasted of potential returns of 25 percent. Connecticut has placed an additional $50 million with AllianceBernstein.
Other public funds, including California's teacher retirement program and public employee funds in New York and Massachusetts, are considering investing in PPIP, the Journal reported.
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