Barclays is strongly backing Black Knight Financial Services’ potential initial public offering, believing that it is uniquely positioned to benefit from both near-term positive catalysts.

Fidelity National Financial (FNF) announced it is planning an initial public offering of stock in its subsidiary, Black Knight Financial Services on Dec. 26.

According to the SEC filing, Fidelity filed S-1 with the SEC recently. In the filing, Fidelity said that the number of shares to be offered and price range of the offering was yet to be determined.

Barclays sees the IPO as a positive due to potential BKFS spin from to a ~7% near-term upside in FNF if BKFS trades at the average peer multiple of ~12x 2015 EBITDA, in addition to buybacks.

Black Knight will also benefit from the longer-term leverage to the ongoing recovery in the mortgage market, making the stock an attractive investment opportunity for investors. 

In the second quarter, Black Knight recorded total revenue of $201 million, a sequential improvement of 7% versus the first quarter of 2014, led by mortgage servicing technology revenue of approximately $122 million. That helped to increase Fidelity’s total revenue from $1.6 billion in the second quarter of 2013 to $1.7 billion in the second quarter of 2014.

Fidelity matched that revenue total in the third quarter, with Black Knight reporting total revenue of $214 million in the third quarter, which was up 11% compared to the third quarter of 2013. The company attributed the growth to “RealEC and Data and Analytics, and factoring out the increase of $15 million during 2014 from the addition of Property Insight.”