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Private equity firm Thomas H. Lee Partners takes ownership stake in Guaranteed Rate

Firm makes “material capital and strategic investment” in growing lender

Back in October, private equity firm Thomas H. Lee Partners acquired a majority interest in Ten-X, the parent company of Auction.com, but that’s not the only significant investment in the housing industry that the firm is making this year.

The firm is also investing in Guaranteed Rate and taking an ownership stake in the growing retail mortgage lender.

Guaranteed Rate announced the investment on Thursday afternoon.

Under the terms of a definitive agreement between Guaranteed Rate and an affiliate of Thomas H. Lee Partners, THL will make a “material capital and strategic investment” in Guaranteed Rate.

Guaranteed Rate founder Victor Ciardelli will continue to lead the company as CEO and chairman of the board and will continue running day-to-day operations, while THL will have a “meaningful minority stake” in the company.

Financial terms of the deal were not disclosed, so it’s unknown at this time how much money THL is investing in Guaranteed Rate.

Guaranteed Rate said that a portion of the money will used to fund the repurchase of certain shares from the company’s existing shareholders, and the remainder will be used for “general corporate purposes.”

According to Guaranteed Rate, the company will use the funding to “build on its existing origination framework to create a next generation lending platform that further streamlines the mortgage process by enhancing workflow, allowing loan officers to spend less time working on individual files and more time developing relationships and growing the business.”

Additionally, the company plans to make investments in technology, marketing, and recruiting new talent to help the company grow its market share.

The company is currently the sixth largest retail mortgage lender in the country. According to the company, it earned more than $778 million in gross revenue in 2016 and expects to fund over $20 billion in new mortgages in 2017.

Guaranteed Rate also said that it expects to use its “enhanced capital structure” to further develop proprietary products through its private-label securitization and portfolio capabilities.

“We are thrilled to announce our new partnership with THL as we enter another exciting phase of our growth strategy,” Ciardelli said.

“THL has a long history of successfully collaborating with fast-growing companies like Guaranteed Rate, and they also bring the experience, capital and resources that will enhance our capabilities and help us move closer to achieving our ultimate goal of becoming the country’s largest retail mortgage lender,” Ciardelli added.

“THL shares our core values of financial and operational discipline, combined with a culture of inventiveness, self-sufficiency and collaboration,” Ciardell concluded. “We are very excited to begin this journey with them.”

Ganesh Rao, managing director at THL, touted the strength of Guaranteed Rate’s business one of the main reasons the firm invested in the lender.

“Victor and his entire team have built a fantastic company that is centered around a unique and innovative platform, which offers a seamless customer experience and a strong value proposition for consumers, realtors and the company’s loan officers,” Rao said.

“When evaluating different opportunities in the mortgage space, it became clear to us that Guaranteed Rate is well-positioned to thrive and grow market share moving forward, and that it is a great company to partner with in the mortgage market,” Rao continued.

“Guaranteed Rate’s industry leading purchase origination mix, excellent track record of growth and experienced team make this a compelling opportunity for THL,” Rao said. “We look forward to working with Victor and the Guaranteed Rate team to maximize the potential of this business, and to further propel the Company’s continued growth and success in the years ahead.”

The companies said that the deal is subject to customary closing conditions and regulatory approvals and is expected to close in the first quarter of 2018.

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