(Bloomberg) -- Midwestern money manager O’Brien-Staley Partners acquired hundreds of New York City taxi medallion loans, becoming a major player in an industry upended by Uber and Lyft.
O’Brien-Staley, founded by two former Cargill Inc. executives, bought performing loans secured by more than 400 medallions from Signature Bank, according to regulatory filings and interviews. That equals roughly 3% of the 13,587 medallions that are either in use or storage, according to the New York City Taxi and Limousine Commission.
Lenders such as Signature and Capital One Financial Corp. have suffered losses on medallion loans as taxi ridership and revenue plummeted in the face of competition from ride-hailing services Uber Technologies Inc. and Lyft Inc. That has left many cab drivers swamped by debts they can’t repay.
With regulators investigating allegations of predatory lending, medallion prices have fallen as low as $110,000 from roughly $1 million at the start of the decade. Banks that haven’t budged on price may become more willing to sell their loans to private equity and hedge fund firms.
“There are other players resurfacing,” said Matthew Daus, an attorney at Windels Marx who formerly served as commissioner of New York’s taxi and limousine bureau. Some banks “may cut their losses once and for all.”
Susan Turkell, a spokeswoman for New York-based Signature, confirmed in an email that the bank made a bulk sale of performing loans to O’Brien-Staley earlier this year, representing more than 400 medallions. Signature’s second-quarter financial report disclosed the sale of about $46.4 million in loans tied to medallions and $4.6 million in repossessed medallions.
E. Gerald O’Brien, chief investment officer at O’Brien-Staley, declined to comment. The former head of global loan portfolios at CarVal Investors, a credit investment unit at Cargill, O’Brien co-founded the firm in 2010 with Warren Staley, a former Cargill chief executive officer.
O’Brien-Staley’s website says it specializes in “unloved” credits. The firm had about $1.3 billion of regulatory assets under management at the end of last year. It now ranks as one of the largest lenders against medallions, said Andrew Murstein, president of Medallion Financial Corp., which originates and services taxi loans.
“It is another positive sign for the industry that another fund with a successful track record believes that medallions are a good investment,” Murstein said in an email.
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