Western Alliance buys mortgage company AmeriHome for $ 1 billion

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(Reuters) – Western Alliance Bancorp said on Tuesday it would buy out mortgage service AmeriHome for about $ 1 billion in cash, in a deal that would bolster the bank’s house financing activities.

Backed by private equity firm Apollo Global Management and its insurance subsidiary Athene Holding, AmeriHome, based in Thousand Oaks, Calif., Acquires and manages mortgages issued by a network of brokers and financial institutions across the United States.

The deal, partially funded by a sale of $ 275 million of new Western Alliance shares, would increase the bank’s commission income and generate enough revenue to quickly cover the purchase price, the chief executive told Reuters from Western Alliance, Ken Vecchione.

News of the sale comes four months after AmeriHome announced plans to make an initial public offering (IPO) that would have valued it at more than $ 1.3 billion. The offering did not take place.

Mortgage companies have struggled to attract investors to share their offers amid fears that mortgage activity will peak in 2020 as consumers take advantage of historically low interest rates to refinance home loans existing.

Earlier this month, mortgage lender LoanDepot Inc reduced the size of its IPO and the selling price of its shares to ensure it could complete its listing.

Vecchione told Reuters he believed Western Alliance was getting “a reasonably priced deal,” and the bank used AmeriHome’s 2019 financial results when assessing whether to buy the company, to take into account the high activity levels of the past year.

AmeriHome Managing Director Jim Furash, who will continue to lead the business as a unit within the Western Alliance after completion, added that AmeriHome’s business has been more focused on new mortgages. which protected it from the decline in refinancing activities expected in 2021.

Evercore and Guggenheim Securities were financial advisers to Western Alliance on the transaction, which is expected to close in the second quarter of 2021. Houlihan Lokey Capital and Wells Fargo Securities advised AmeriHome.

Reporting by Niket Nishant in Bengaluru and David French in New York; Editing by Shailesh Kuber, Maju Samuel and Sonya Hepinstall

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