American Capital Mortgage Investment expects shares to trade at $20
American Capital Mortgage Investment, a newly-formed mortgage REIT, has proposed a price of $20 per share for its initial public offering. Net proceeds will be invested in mortgage-backed securities and related products including residential mortgage-backed securities, residential mortgage loans, commercial mortgage-backed securities and commercial mortgage loans. The Bethesda, Md.-based company, managed by American Capital MTGE Management, plans to offer 17.5 million shares with another 2.63 million available for over-allotments. American Capital MTGE is an indirect subsidiary of American Capital a wholly owned portfolio company of American Capital Ltd. (ACAS). Citigroup Global Markets, Deutsche Bank Securities, UBS Securities and Wells Fargo Securities are acting as joint book-running managers. The company said it will finance its assets through a combination of financing arrangements, including repurchase agreements, warehouse facilities, securitizations and term financing facilities. "We intend to focus on asset selection and the relative value of various sectors within the mortgage market," the firm's regulatory filing said. "We believe that the residential mortgage market will undergo dramatic changes in the coming years as the role of (government-sponsored entities) such as Fannie Mae and Freddie Mac, is diminished, which we expect will create attractive investment opportunities for us." It notes that risks of investing in the IPO include, among others, the risks associated with changes in prepayment rates, interest rates and the economy. Write to Kerry Curry. Follow her on Twitter @communicatorKLC.