By Alexander Osipovich 

Intercontinental Exchange Inc., the owner of the New York Stock Exchange, said it would acquire mortgage-software firm Ellie Mae, a landmark bet by the exchange giant on the digitization of the U.S. mortgage industry.

The deal with private-equity firm Thoma Bravo values Ellie Mae at $11 billion, including debt.

Atlanta-based ICE, as the exchange operator is known, is funding 84% of the deal's price tag with cash, and the rest with newly issued stock. The deal is expected to close in the third or fourth quarter of 2020, pending regulatory approval, it said.

Thoma Bravo acquired Ellie Mae last year for $3.7 billion.

ICE has been stepping up its presence in the mortgage market during the past several years, in a bet that the cumbersome, often paper-based process of closing a mortgage deal will go digital in the coming decades.

In 2018, ICE acquired 100% of the parent company of Mortgage Electronic Registrations Systems, a national electronic registry for tracking servicing rights and ownership interests for U.S. mortgage loans. Last year ICE acquired Simplifile, a firm that facilitates electronic processing of mortgage records, in a $335 million deal.

ICE executives said on a quarterly earnings call last week that the mortgage business had become the fastest-growing part of the company, although it still accounts for a relatively small part of ICE's total revenue. Mortgage-related revenue rose to $98 million in the first six months of 2020, from $48 million a year earlier, an increase primarily driven by the Simplifile deal, the company said. ICE posted more than $6 billion in total revenue last year.

The Ellie Mae acquisition is the largest-ever deal for ICE, which was founded 20 years ago as a small electricity-trading platform and has since grown into a global exchange operator through a series of deals.

Led by Chairman and Chief Executive Jeffrey Sprecher, ICE has a history of jumping into businesses in the process of transitioning from analogue to digital. In the 2000s, the company did a series of deals in which it acquired futures exchanges and closed down their old-fashioned trading floors to convert them into all-electronic markets.

Write to Alexander Osipovich at alexander.osipovich@dowjones.com

 

(END) Dow Jones Newswires

August 06, 2020 16:49 ET (20:49 GMT)

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