Blackstone-Backed Finance of America Is Set for IPO -- Update
October 13 2020 - 8:37AM
Dow Jones News
By Corrie Driebusch
Consumer-lending platform and Blackstone Group Inc. portfolio
company Finance of America Equity Capital LLC is set to go public
with a valuation of $1.9 billion through a blank-check merger, this
year's hottest way to list shares.
Finance of America is set to merge with the special-purpose
acquisition company, or SPAC, Replay Acquisition Corp., the two
companies said Tuesday, confirming an earlier report by The Wall
Street Journal. In conjunction with the merger, institutional
investors will also make a private investment of $250 million in
the company. In all, the deal will leave the consumer lender's
founder and funds managed by Blackstone with a 70% ownership
stake.
SPACs are all the rage in 2020, quickly having become a favored
way for companies to go public in a year when initial public
offerings are hotter than ever. Their popularity is a sign that
there is more demand for newly listed companies than there are
companies going public. So far this year, companies have raised
more than $109 billion going public in the U.S., surpassing every
other full year on record, according to Dealogic, whose data go
back to 1995. SPACs have accounted for almost half of that
total.
The sole purpose of SPACs, which are also known as blank-check
companies, is to raise money to acquire a private target and take
it public. Founders of these shell companies pitch their names or
expertise in certain industries; once they have raised a certain
amount of money they have a specific amount of time, typically two
years, to identify a target. Announced deals are subject to
shareholder approval. Finance of America's services include
traditional mortgages, reverse mortgages, commercial-real-estate
loans and fixed-income investing. It has grown via a series of
acquisitions and over the past roughly five years as a portfolio
company of Blackstone's Tactical Opportunities business, which can
invest across any asset class, industry, sector, security type or
geography.
The move is the latest in a recent spate of financial
dealmaking. This summer, Quicken Loans parent Rocket Cos. went
public through a traditional IPO. Last month, wholesale mortgage
originator United Wholesale Mortgage said it intended to go public
via a SPAC, and Caliber Home Loans Inc. is also prepping an IPO.
Morgan Stanley recently struck a deal to buy fund manager Eaton
Vance Corp., and activist investor Nelson Peltz invested in Invesco
Ltd. and Janus Henderson Group PLC, planning to agitate for a
deal.
The new listings come as the mortgage market has held up
surprisingly well in the face of the coronavirus pandemic, with the
Mortgage Bankers Association expecting mortgage originations to hit
recent highs in 2020. Record-low interest rates are also driving
refinancings, with the Mortgage Bankers Association expecting
mortgage originations to hit recent highs in 2020.
Finance of America had been considering a traditional IPO but
then earlier this summer began speaking with the founders of Replay
Acquisition Corp., a person familiar with the matter said. 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.
Write to Corrie Driebusch at corrie.driebusch@wsj.com
(END) Dow Jones Newswires
October 13, 2020 08:22 ET (12:22 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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