HomeEquity Bank (HEB), a Canadian federal bank and the leader of the nation’s reverse mortgage industry, announced on Wednesday that it will be acquired by the Ontario Teachers’ Pension Plan Board which is responsible for administering defined-benefit pensions for school teachers of Ontario, the Canadian province which is home to the city of Toronto. This is according to an announcement shared by HEB’s EVP of Marketing and Sales Yvonne Ziomecki with RMD.
Terms of the deal were not disclosed, but it is expected that the acquisition will be complete in the first half of 2022 in concert with appropriate regulatory review and approval, Ziomecki said.
“This is great news for HomeEquity Bank, our customers, partners, and employees,” Ziomecki told RMD in an email. “It is a testament to the success of our business strategy, and to the amazing work of our talented team.”
It is not expected that the acquisition will have any material impact on the day-to-day operations of HEB, Ziomecki says, nor will there be any changes to existing contracts or existing agreements between HEB and its current slate of partners.
“HomeEquity Bank will continue to operate independently, and we are not being integrated into another company,” Ziomecki says. “We are excited to grow our partnership and empower even more Canadians aged 55-plus to retire on their terms.”
In terms of how a pension fund intertwines with the business of a reverse mortgage lender, Ziomecki describes Ontario Teachers’ Pension Plan as a “world-leading Canadian institutional investor, [which] sees incredible potential in our product and market.”
The decision comes after a series of positive results for HEB stemming from its offering of reverse mortgages to qualifying Canadian seniors age 55 and higher.
“It is impressed with our growth and will invest in HomeEquity Bank for the future,” Ziomecki explains. “Its long-term capital profile, strong track record of delivering retirement solutions, and shared vision for making a positive impact on the lives of retired Canadians make it a natural partner for us.”
HEB, which is a subsidiary of HomeQ Corp., is currently owned by Birch Hill Equity Partners Management Inc. Birch Hill initially acquired HomeQ and HEB in 2012 in a deal valued at the time at C$136 million (roughly $122 million USD today accounting for inflation), according to Bloomberg.
Last Fall, HEB launched a new product variation designed to offer Canadian seniors a short-term reverse mortgage product that they can use to cover specific tasks. “CHIP Open” is an alternative to the standard “CHIP Reverse Mortgage,” and is designed for Canadians aged 55 and older who are interested in a short-term, immediate financial solution with no prepayment penalties.
CHIP Open offers qualifying homeowners a three-year variable term with access to a minimum loan amount of $25,000 CAD, and up to 55% of the appraised value of their home, according to an announcement from HEB.