ROSEMONT, Illinois, and CHICAGO, Illinois – December 14th, 2018 — Wintrust Financial Corporation (Wintrust) (Nasdaq: WTFC) announced today the acquisition of Elektra Holding Company, LLC (Elektra), the parent company of Chicago Deferred Exchange Company, LLC (CDEC). CDEC is a premier provider of Qualified Intermediary services (as defined by U.S. Treasury regulations) for taxpayers seeking to structure tax-deferred like-kind exchanges under Internal Revenue Code Section 1031. Under IRC Section 1031, a taxpayer may defer the gain on the sale of certain investment property if the taxpayer utilizes the services of a Qualified Intermediary.
CDEC has successfully facilitated more than 8,000 like-kind exchanges in the past decade for taxpayers nationwide. These transactions typically generate customer deposits during the period following the sale of the property until such proceeds are used to purchase a replacement property. These deposit flows result in a source of low-cost deposits. During 2018, deposits from CDEC customers averaged over $1 billion.
Edward J. Wehmer, President and CEO of Wintrust, commented on the completion of the transaction: “With the acquisition of CDEC, we establish ourselves as a major player in the Qualified Intermediary market for tax-deferred exchanges under IRC Section 1031. CDEC’s services will augment the comprehensive range of services that Wintrust provides to our customers in the commercial real estate market. This transaction also provides Wintrust with a new fee-generating business and a significant new potential source of low-cost deposits. Together, we are well-positioned to employ our expanded resources and scale to further enhance CDEC’s growth, strategies and client service.”
Tom Zidar, Chairman of the Wintrust Wealth Management companies, added: “We are excited to join forces with CDEC. Their leadership team has an outstanding reputation and track record of providing exceptional customer service. We are thrilled to bring their expertise and capabilities to Wintrust and look forward to supporting the further growth of their business.”
Bryan Daniels, Founding Partner of Prairie Capital, majority owner of Elektra, who served as a Board member of Elektra, noted: “We believe CDEC’s expertise, combined with Wintrust’s reputation and capabilities, will provide a powerful platform that will benefit both clients and employees.”
Mary Cunningham, who will continue to serve as CEO of CDEC, shared her perspective: “This merger brings together two firms that share many common values and operate distinct but complementary lines of business. We look forward to joining the Wintrust family.”
Terms of the Transaction
The aggregate purchase price was paid in cash and totaled approximately $51.9 million. The transaction is expected to be slightly accretive to Wintrust’s 2018 earnings per share.
Kirkland & Ellis LLP acted as Elektra’s transaction counsel, and Schiff Hardin LLP served as transaction counsel to Wintrust. Colonnade Securities LLC acted as a financial advisor to Elektra.
About Chicago Deferred Exchange Company
Chicago Deferred Exchange Company, LLC (CDEC) provides qualified intermediary and exchange accommodation titleholder services to investors seeking to structure tax-deferred exchanges under IRC Section 1031. It offers intermediary and exchange accommodation titleholder services to attorneys, accountants, real estate, and tax professionals in the United States. The company was founded in 1989 and is based in Chicago, Illinois with locations in San Ramon and Imperial Beach, California. As of December 14, 2018, Chicago Deferred Exchange Company, LLC operates as a subsidiary of Wintrust Financial Corporation.
About Prairie Capital
Prairie Capital, L.P. is a private equity firm specializing in buyouts, recapitalizations, ownership transitions, family held businesses, growth capital, and mature investments in lower middle market companies and mezzanine financing. The firm invests in privately held companies having significant operations in the United States with a focus on the Midwest. It makes equity investments of $3 million to $35 million in companies having annual cash flows between $4 million and $12 million, annual revenues between $10 million and $100 million, enterprise value between $20 million and $100 million, and EBITDA between $3 million and $15 million. The firm provides capital in the form of common stock, preferred stock, and supportive subordinate debt with warrants. Prairie Capital, L.P. was founded in 1997 and is based in Chicago, Illinois.
Wintrust is a financial holding company with assets of approximately $30 billion whose common stock is traded on the NASDAQ Global Select Market. Built on the “HAVE IT ALL” model, Wintrust offers sophisticated technology and resources of a large bank while focusing on providing service-based community banking to each and every customer. Wintrust operates fifteen community bank subsidiaries with over 160 banking locations located in the greater Chicago and southern Wisconsin market areas. Additionally, the Company operates various non-bank business units, including one of the largest commercial insurance premium finance companies operating in the United States and Canada, a company providing short-term accounts receivable financing and value-added out-sourced administrative services to the temporary staffing services industry, a business unit engaging primarily in the origination and purchase of residential mortgages for sale into the secondary market throughout the United States, and companies providing wealth management services with more than $26 billion in assets under management or administration.