MAXEX lands equity investment, partnership to expand liquidity

Investment round was led jointly by South Street and Atlas Merchant Capital

Digital mortgage exchange and loan aggregator MAXEX announced on Monday it closed an equity investment round and partnerships to expand liquidity amid the recent market volatility. Terms of the transaction were not disclosed. 

The investment round was led jointly by the financial institution South Street Securities Holdings and the investment firm Atlas Merchant Capital, headed by former Barclays CEO Bob Diamond. (Atlas also has a minority investment in South Street.) 

The three companies will collaborate to accelerate industry adoption of MAXEX’s platform and expand access to MAXEX and South Street products and services. The companies claim they collectively serve more than 500 market participants. 

Several of MAXEX’s existing investors, including J.P. Morgan and Moore Asset Backed Fund, also participated in the round.

Houlihan Lokey served as the financial advisor to MAXEX. 

“MAXEX’s mission is to serve as a market utility and liquidity provider for the U.S. mortgage markets,” Tom Pearce, CEO, chairman and co-founder of MAXEX, said in a statement. “This partnership enables us to further accelerate our growth, expand our product suite and broaden our network.”

South Street will provide capital support to MAXEX’s existing clearinghouse facility as part of the deal.

It will “further enhance MAXEX’s counterparty strength by leveraging South Street’s investment-grade rating and approximately $30 billion balance sheet,” the company said in a statement. 

According to Jim Tabacchi, president and CEO of South Street, “Recent market volatility emphasized the need for fundamental change in the mortgage secondary market as lenders and investors struggled to adapt to rapidly rising rates, liquidity shortages, and the need to operate with more nimble, flexible infrastructure.” 

The deal with MAXEX expands access to a broad range of non-agency and agency-eligible mortgage loan programs.

“This partnership enhances our offering and TBA pipeline hedging platform by giving clients access to MAXEX’s loan trading exchange,” Tabacchi said. 

In May 2022, MAXEX launched a DSCR [debt-service coverage ratio] loan-purchasing program for originators looking to tap into the growing mortgage demand from individual and small-business real estate investors, such as rental property owners, who “tend to prioritize property cash flow over interest rate.” 

The company also announced that it expanded its bulk- and forward-trading loan programs. 

In September 2022, the digital mortgage platform unveiled a series of new programs designed to serve originators and loan buyers in the growing non-QM lending market.

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