The Canadian national provider of reverse mortgages HOMEQ announced on March 30 its board is recommending it accepts an offer from private equity company Birch Hill to acquire HOMEQ Corporation for $9.50 per common share.
Birch Hill Equity Partners will indirectly acquire all of the outstanding shares in a deal totaling $138 million, according to company statements.
“We are delighted that Birch Hill has recognized the inherent value in our business,” said Chairman of the Board, Gary Samuel. “We believe that the all cash offer is highly attractive to existing shareholders. Birch Hill’s long-term track record of successfully investing in Canadian mid-market companies, and its ability to support HOMEQ’s strategic initiatives, will assist HOMEQ in reaching its full potential and achieving its growth plans.”
Those growth projections include continuing to provide reverse mortgages under Canada’s CHIP Home Income Plan, a boom market in recent months that saw a 16% increase for the company in 2011 over 2010. The company recorded $239 million of reverse mortgages in 2011. It also reduced the age requirement for reverse mortgages from age 60 to age 55 in June 2011.
“Over the last three years we have achieved extremely encouraging volumes of mortgage originations and growth in our portfolio,” said President and CEO Steven Ranson. “Our new ownership structure will provide us with a reliable source of capital, enabling us to serve the financial needs of the burgeoning ranks of seniors, Canada’s fastest growing demographic.”
As of December 2011, the company had a reverse mortgage portfolio comprising 9,000 loans, valued at a total of $1.2 billion.
Written by Elizabeth Ecker