Black Knight to Acquire Optimal Blue in $ 1.8 Billion Deal to Strengthen Original Offerings


This article was written for FinLedger, HW Media’s new fintech-focused news brand, designed specifically for financial services professionals in banking, insurance and real estate. Stay listening for updates.

A few weeks later published reports this Optimal blue was for sale, fintech giant Black Knight Inc. announced this morning that it would buy the Dallas-based company for $ 1.8 billion.

Price is a steep premium over Chicago-based $ 350 million private equity firm GTCR LLC paid the company in 2016 in a leveraged buyout. It’s also much higher than the $ 1 billion the sources predicted. earlier this month.

Black Knight announced plans to combine its Compass Analytics business with Optimal Blue to form a new entity with minority co-investors Cannae Holdings Inc. and Thomas H. Lee Partners LP (THL). Black Knight will own approximately 60% of the newly formed entity. It finances the acquisition with cash, debt financing and equity contributions from Cannae and THL.

Optimal Blue’s online marketplace aims to connect mortgage originators, investors and providers. Nearly $ 2 trillion in transactions are processed on the platform each year, facilitating a number of secondary market interactions such as pricing, foreclosure, hedging, and mortgage trading.

Founded in 2002, the company once focused on construction products that help mortgage lenders comply with federal fair lending laws and regulations.

Today, approximately 1,000 originators and 185 investors use Optimal Blue’s Product, Pricing, and Eligibility (PPE) engine. Its network includes more than 3,500 industry participants, including brokers and service providers. The company’s EPI engine produces more than 240 million quotes per year, which the company says represents about 35% of all title loans with interest rates stranded nationwide.

Since its acquisition by GTCR, Optimal Blue has acquired three companies, including comprehensive mortgage management software provider Resitrader and Comergence, a provider of risk management tools.

While the companies don’t specifically comment on revenue, Barron’s reported earlier this month that Optimal Blue has annual revenue of $ 110 million.

In a statement, Anthony Jabbour, CEO of Black Knight, said his company has respected Optimal Blue “for many years.”

The acquisition, he added, combines the capabilities of PPE with Black Knight’s offerings and strengthens its data and analytics capabilities. He said the two companies share similar SaaS (subscription-based) business models and that the addition of Optimal Blue will be accretive to Black Knight’s key financial metrics while creating “meaningful value” for its shareholders.

“The combination of the strengths of Black Knight and Optimal Blue will provide customers of both companies with additional offerings from a single source and significantly expand Black Knight’s opportunities to sell our complete solutions,” said Jabbour.

Optimal Blue CEO Scott Happ said the two companies “share similar strategies for innovation, onboarding and customer focus, as well as a similar culture.”

“We are thrilled with the opportunity to be a part of Black Knight, where there is such a good strategic fit, a strong customer base and so many opportunities to provide innovative solutions that will add value to our customers,” said added Happ.

Optimal Blue says the goal of its PPP engine is to streamline the origination process for lenders by consolidating pricing and product guidelines from investors. With this aggregation, lenders can more effectively evaluate and create mortgage products that can be sold in the secondary market. The PPE engine, he says, gives investors a way to retrieve and publish interest rates through an automated workflow to its network of mortgage industry participants. This makes the process more efficient for the entire industry, he says.

Optimal Blue also provides information on pricing, company data, competitive positioning and industry trends.

Optimal Blue’s Resitrader is a cloud-based loan trading platform to which Black Knight plans to add its original and maintenance data assets. Ultimately, Black Knight sees this combination being able to “further streamline loan selling” between its service customers, as well as those not currently using Black Knight’s MSP service software.

The transaction remains subject to regulatory approval and other customary closing conditions, but is expected to close in the third quarter.

In a statement, Collin Roche, managing director of GTCR, said that Optimal Blue has “turned into a true digital market.”

“It has broadened its customer base, broadened its integrations with the mortgage technology ecosystem and consolidated its unique position at the crossroads of trade flows and transactions in the secondary mortgage market,” he added. “We believe the company is well positioned to continue to grow within Black Knight.”

Meanwhile, in the world of mergers and acquisitions, real estate data and analysis company CoreLogic said last week it was still I do not wish accept an unsolicited takeover bid of $ 7 billion from investors Senator Investment Group LP and Cannae Holdings Inc.

This article was written for FinLedger, HW Media’s new fintech-focused news brand, designed specifically for financial services professionals in banking, insurance and real estate. Stay listening for updates.

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