Arcapita Group Holdings, a Bahraini investment firm, has acquired a controlling stake in large independent appraisal management company Nationwide Property and Appraisal Services for an undisclosed price.
The deal, which was announced Monday, gives Arcapita an AMC that serves mortgage lenders in all 50 states, has a network of over 15,000 licensed appraisers, and grossed $144 million in revenue in 2021.
Nationwide has been under the umbrella of Corridor Capital, a lower middle market private equity firm, since 2016. Corridor will retain a stake in Nationwide, which claims to have more than 100 lenders and 21 of the top 25 wholesale lenders in the country as clients.
“We were attracted by Nationwide’s highly cash generative business, experienced management team, and strong base of clients across the country,” Arcapita CEO Atif Abdulmalik said in a statement. “Close to 50% of Nationwide’s customers have maintained their relationship with the company for over six years, highlighting the longevity of its customer relationships, and the company benefits from a free cash flow conversion rate of over 99%.”
Nationwide, led by Sri Velamati and purportedly the second-largest AMC in the country, itself has been acquisitive in recent years. The AMC has acquired five other companies since Corridor bought a stake in Nationwide in 2016. In June, Nationwide acquired Portland, Oregon-based First Choice Appraisal Management, expanding its reach into the Pacific Northwest.
Other large financial firms are also putting money into the appraisal management space, which is highly fractured.
In September, appraisal management company Class Valuation, a subsidiary of investment firm Gridiron Capital, acquired Kansas City, Missouri-based Pendo Management for an undisclosed sum. And in October, private holding group StoicLane acquired control of the appraisal management company Lender’s Valuation Services (LVS).
The appraisal industry has been a focus of the Biden administration. The Department of Housing and Urban Development formed a task force to root out bias in appraisal, and the Appraisal Subcommittee issued a scathing report last week that concluded the appraisal industry was essentially self-regulated and suffers from numerous structural problems.
Further, a report issued by Fannie Mae in late January concluded that Black borrowers refinancing their home on average received a slightly lower appraisal value relative to automated valuation models (AVMs); homes owned by white borrowers were more frequently overvalued than homes owned by Black borrowers; and six states – Georgia, Louisiana, South Carolina, North Carolina, Mississippi, and Alabama – accounted for nearly 50% of the overvalued homes of white owners in majority-Black neighborhoods.
HousingWire in June published a longform examination of the appraisal industry’s unconventional – and trying – relationship between appraisers and appraisal management companies.