Finance of America Equity Capital, a holding company that has businesses involved in forward and reverse mortgages, commercial real estate and fixed income investments, goes public and merges with a special purpose vehicle.
The SPAC, Replay Acquisition Corp., was founded by Edmond Safra, Gregorio Werthein and Gerardo Werthein. Finance of America's current investors include Blackstone Group, which, along with management from FOA, will retain 70% of the company upon completion of the merger.
"Becoming a public company is an important milestone for Finance of America and over time will provide additional access to capital through the public markets," said CEO Patricia Cook in a press release.
FOA joins United Wholesale Mortgage by going public through a SPAC. Rocket Cos. Goed public through an IPO; Two other non-banks, Caliber Home Loans and AmeriHome Mortgage, have announced that they will also go public.
The deal values FOA at $ 1.9 billion. Senior institutional investors have committed to investing $ 250 million in a private placement at $ 10 per share of the combined company's Class A common stock immediately prior to the closing of the transaction. The estimated cash proceeds for the deal also include Replay Acquisition's trust assets of $ 288 million.
Preliminary third quarter results in a slideshow presentation filed with SEC states. FOA financed between $ 9 billion and $ 9.3 billion in the third quarter. Revenue should be between $ 515 and 540 million and EBITDA between $ 215 and 235 million.
The net income forecast for this year is $ 391 million, compared to $ 77 million last year and $ 47 million in 2018.
In April, the reverse mortgage subsidiary paid a 10-year old bad debt fee of $ 2.5 million on a company it had acquired.
Simpson Thacher & Bartlett is the FOA's legal advisor. Credit Suisse Securities (USA) acted as capital markets advisor to Replay Acquisition, Morgan Stanley and Goldman Sachs acted as lead placement agents and Credit Suisse Securities (USA) acted as placement agent for the private placement transaction. Greenberg Traurig is the legal advisor to Replay Acquisition.