End-to-end lending and services platform Finance of America Capital is the latest mortgage company to get in on the mushrooming IPO craze.
The lender and servicer, owned by the Blackstone Group’s Tactical Opportunities business, is slated to go public in the first half of 2021 through a special purpose acquisition company at a $1.9 billion valuation.
After it merges with Replay Acquisition Company, Finance of America will receive a $250 million investment from institutional investors, according to the Wall Street Journal, which first reported the merger. Blackstone will own 70% of the company, which is expected to go public in the first half of 2021.
Finance of America, says its collection of companies has originated over $65 billion in loans since 2017. Its products include traditional mortgages, commercial real estate loans, reverse mortgages, fixed-income investing and title services. Blackstone has expanded its Finance of America corporation through a number of acquisitions in recent years, including pickups of Gateway Funding, Pinnacle Capital Mortgage and Skyline Home Loans.
Finance of America operates through retail, wholesale and correspondent channels. It does much of its business on the West Coast.
In all, this year the firm has originated $19.2 billion in securitized mortgages as of Oct. 1, 2020, according to data from Recursion Companies. It has sent $16.2 billion in originations to the GSEs, and its servicing book as of Oct. 1 was $14.5 billion, according to Recursion’s data. It sold $1.69 billion in MSR as of Oct. 1.
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Like most mortgage lenders, the Blackstone portfolio company has benefited from ultra-low interest rates and a phenomenal rise in refinancing business. Finance of America originated over $7.4 billion in the third quarter, the highest of any quarter on record for the Pennsylvania-headquartered firm, per Recursion data. In 2019, the firm originated about $11 billion in securitized mortgages, according to Recursion. Roughly 75% of its mortgages in 2019 were conventional loans, with about 18% FHA, according to HMDA data.
Finance of America had been considering a traditional IPO but changed course after speaking with the founders of Replay Acquisition over the summer, according to the Journal. Though the money raised in the deal goes to current owners, the person said becoming a publicly traded company will allow the consumer-lending platform to raise additional capital more easily going forward.
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