WASHINGTON — Syncora Investment Holdings, a wholly owned subsidiary of Syncora Guarantee, Inc., has purchased a majority stake in the independent derivatives advisory firm, Swap Financial Group.
The transaction took place on Jan. 8, said Michael Corbally, Syncora's spokesman.
eter Shapiro, who founded South Orange, N.J.-based Swap Financial, said Friday that he sold his equity in the firm and has an arrangement with Syncora Investment Holdings, headquartered in New York, to stay on at the firm for at least three years.
Nat Singer, who joined Swap Financial in January 2008 after heading the municipal derivatives products group for the now defunct Bear Stearns, said he sold a portion of his equity in Swap Financial. Singer works in San Diego and will also stay on.
Shapiro said the deal will not change Swap Financial, its business or personnel, at least for now, but will put the firm on a stable path for the future.
"All the functioning will remain the same," he said.
"But on a personal note, for the last number of years, one of the things that's been most on my mind after leading this firm for more than 17 years has been what the future will be and being able to put a stable future in place for the firm," Shapiro said.
This "leaves me to be able to do the stuff that I love most, working with clients on transactions," he said.
Shapiro said the deal was not prompted by any health or financial problems.
"The firm has been wonderfully profitable with tremendous stability since the financial crisis," he said. "This gives us a stable platform for continuity and reasonable growth."
"We've got a thriving business and that's the part that excites me the most," said Singer. "We've got continuity to go forward."
Shapiro said Syncora, a former bond insurer that is currently in a "run off mode," currently has no principal role in derivatives transactions.
"We have no conflict at all," he said. "Our credibility is based on being a conflict-free advisor to issuers. We couldn't maintain that if we were affiliated with a firm that does derivatives as a principal."
Syncora Guarantee and its wholly owned subsidiary Syncora Capital Assurance, Inc., no longer write insurance policies but continue to manage a combined portfolio of about $45 billion in net par exposure, as of Sept. 30, 2014, Corbally said.
"Syncora is looking for opportunities to provide sustainable sources of economic value for all stakeholders and our investment in Swap Financial is one such example," he said.
Shapiro pointed out that it is a good time to be in the financial advisory business, with recent regulatory charges.
Susan Comparato, Syncora Holdings, Ltd. chief executive officer, said, "We see great potential to build upon Swap Financial's outstanding reputation and solid foundation as a leading advisor in the municipal financial services sector. This investment represents an excellent opportunity for Syncora to partner with a successful business that is well managed by industry veterans, is synergistic with our insurance operations, and one that will we believe will grow and generate enhanced and sustainable value for Syncora's stakeholders.
Asked what he will do when the three years of his contract are up, Shapiro said he is not sure. "I think they're will be opportunities to continue to do work with Swap Financial Group, or teach or do more things of a personal nature. It's too far off to be able to tell at this point," he said.
"If I have anything to do with it, he won't be retiring in three years," Singer said.
