Fargo's Bell State prowls for private equity deals

Newcomer Bell State Bank & Trust quickly became one of the area's top residential ­mortgage lenders.

Now the Fargo-based lender is targeting the private equity space. The fast-moving bank has launched a new division called Bell Capital Finance to provide senior-debt financing for smaller private-equity-backed companies in the Upper Midwest.

"We think there's substantial demand for a local provider of senior debt in these acquisition-related transactions," said Todd Lee, the bank's Twin Cities managing director. "We've got a long ­history at Bell of going after market opportunities when we have subject matter experts."

Joining Bell are Michael Mahoney and Seth Hove. Mahoney, whose résumé includes Wells Fargo Bank and JPMorgan Chase & Co., most recently worked at mezzanine lender Medallion Capital Inc. in Burnsville. Hove was most recently a managing director in the local office of Chicago-based PrivateBank and Trust Co.

The pair will work out of Bell's Twin Cities headquarters in Golden Valley.

As Lee sees it, ­dynamics in the local landscape for senior-debt providers have changed since BMO Financial Group acquired M&I Bank in 2011. BMO is hunting for larger deals now, Lee said, and there's a gap for smaller ones. Most big banks have specialty groups that do cash-flow-based credit or other types of more-structured financing packages.

Bell, however, will focus on money for companies with earnings before interest, taxes, depreciation and amortization of $2 million to $7 million. The cash-flow based funding could either be for the company itself or the private equity fund, Lee said, depending on how the transaction is structured.

"There's clearly more opportunity in the marketplace than there was two, three years ago, Senger said.

Other players in the space include Associated Bank, Bremer Bank, Anchor Bank and St. Louis-based Enterprise Bank & Trust, said Mahoney.

Bell State Bank & Trust has assets of $3 billion, including more than $250 million in the Twin Cities. The bank is owned by the Solberg and Snortland families of North Dakota. It was long called State Bank Trust, but changed its named to Bell State Bank after buying Bell Mortgage in St. Louis Park.