Paceline Equity Partners backs Constellation Software’s Optimal Blue

Paceline acquired a $500 million promissory note that is payable to ICE subsidiary Black Knight

An affiliate of Paceline Equity Partners LLC, a private equity manager based in Texas, completed a debt investment in a subsidiary of Constellation Software Inc.

The investment stems from a merger agreement between Intercontinental Exchange (ICE) and Black Knight, which included the divestiture of Optimal Blue. ICE and Black Knight agreed to sell Optimal Blue to secure regulatory clearance of ICE’s proposed acquisition of Black Knight, a $13.1 billion megadeal announced in May 2022. 

The $700 million proposed transaction included a payment by Constellation of $200 million in cash, with the remainder financed by a $500 million promissory note issued by Constellation to Black Knight. 

To secure regulatory clearance for the merger and the sale of Optimal Blue, the promissory note was required to be sold and Paceline acquired it.

Optimal Blue — a provider of secondary market solutions and actionable data services — facilitates more than $1.1 trillion in mortgage locking and trading transactions per year. The company’s solutions are used by more than 3,500 mortgage lenders, accounting for 35% of all mortgage locks completed nationwide every year, according to its website. 

Optimal Blue plans to solidify its position as an end-to-end solution — from pricing a loan to hedging, trading and selling it — according to a previous HousingWire interview with interim CEO Scott Smith.

“I think integration is key. I don’t think there’s a one-stop shop for your tech,” Smith said. “Open platforms of integration are critical. Optimal Blue integrates with all the loan origination systems (LOSs). I think we have about 70 partners that use our application programming interfaces (APIs) as well.”

“We are excited to support Optimal Blue in the continued growth of its market-leading platform under the ownership of Constellation,” said Sam Loughlin, CEO of Paceline. “We believe our past experience investing in the mortgage industry previously enabled us to move quickly and provide certainty of closing.”

The Paceline team focuses on private equity, corporate debt and real asset investment opportunities across the country. The firm says it has more than $1 billion of commitments currently under management.

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