Just weeks after published reports that Optimal Blue was up for sale, fintech giant Black Knight Inc. announced this morning it will buy the Dallas-based company for $1.8 billion.
The price is a hefty premium over the $350 million Chicago-based private equity firm GTCR LLC paid for the company in 2016 as part of a leveraged buyout. It’s also significantly higher than the $1 billion that sources were predicting earlier this month.
Black Knight said it plans to combine its Compass Analytics business with Optimal Blue to form a new entity with minority co-investors Cannae Holdings Inc. and Thomas H. Lee Partners LP (THL). Black Knight will own about 60% of the newly-formed entity. It is funding the acquisition with cash on hand, debt financing, and equity contributions from Cannae and THL.
Optimal Blue’s online marketplace aims to connect originators, investors, and providers in the mortgage industry with each other. Nearly $2 trillion of transactions are processed across the platform each year, facilitating a number of secondary market interactions such as pricing, locking, hedging, and trading of mortgage loans.
Founded in 2002, the company at one time was primarily focused on building products that help mortgage lenders comply with federal laws and regulations on fair lending.
Today, about 1,000 originators and 185 investors use Optimal Blue’s product, pricing and eligibility (PPE) engine. Its network includes more than 3,500 industry participants, including brokers and service providers. The company’s PPE engine produces more than 240 million pricing quotes per year, which the company says represents about 35% of all mortgages with locked interest rates nationwide.