Aquiline Capital Partners LLC has led a $225 million investment in independent broker-dealer CRT Capital Group, seeking to capture market share while big firms face challenges.

Aquiline--a financial services-focused private-equity firm started by Jeff Greenberg, son of former American International Group Inc. (AIG) chief Hank Greenberg--has taken a majority stake in Stamford, Conn.-based CRT. CRT's management, including Chief Executive Ron Kripalani and Chairman Ben Carpenter and other employees also invested.

Aquiline set its sights on the broker-dealer space more than a year ago, and identified a number of businesses before zeroing in on CRT, said Geoff Kalish, an Aquiline investment professional.

"We knocked on their door," Kalish said. The parties entered into discussions five months ago.

CRT has been around for more than two decades, providing market-making brokerage services to 1,000 clients like banks, hedge funds and insurance companies. The firm specializes in products like corporate credit, U.S. Treasury bonds and mortgage-backed securities.

"Research and liquidity makes them unique to their clients," Kalish said.

In 2009, a group of investors led by Kripalani, who was the former president of Countrywide Capital Markets, and Carpenter and Jay Levine, former co-chief executives of RBS Greenwich Capital, acquired a controlling interest in the firm.

The shareholders were looking to raise capital in order to provide more liquidity for its clients, and Aquiline came into the picture, Kalish said.

There is much growth opportunity, in part due to the disappearance of players like Lehman Brothers Holdings Inc. and Bear Stearns Cos. Existing brokerage houses aren't allocating as many resources to their broker-dealer businesses as they used to, leaving a gap for CRT to fill, Kalish said. Also, the mortgage- backed securities market is anticipated to recover, creating further trading opportunities.

Aquiline plans to reinforce CRT's market position in corporate credit products, and "carve out" market share in the U.S.government bonds and mortgage- backed securities spaces, Kalish said.

In August, private equity firm Arsenal Capital Partners invested roughly $50 million to launch a new fixed-income broker-dealer, KGS-Alpha Capital Markets LP.

(Dow Jones LBO Wire covers news about private equity.)

-By Shasha Dai, Dow Jones LBO Wire; 212-416-2037; shasha.dai@dowjones.com

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