Guaranteed Rate clinches scaled-back deal with first institutional investor – Finance News

on Jun13

13 June 2018 | 10:30 am

It took two months longer than projected, but Guaranteed Rate has finalized its partial sale to a Boston private-equity firm.

The Chicago-based mortgage lender, best known as the name sponsor of White Sox park, completed the sale of a minority stake to Thomas H. Lee Partners, first announced in December. The deal was supposed to close at the end of the first quarter but proved more complicated to complete than initially expected.

Terms weren’t disclosed.

One major difference from last fall’s proposed agreement: THL no longer will get any seats on Guaranteed Rate’s board, CEO Victor Ciardelli said. The original deal called for THL to have two representatives on the seven-member board.

“I am highly confident that we found the ideal institutional partner in TH Lee,” Ciardelli said in an email. “They understand our business, share our core values and will have a non-board advisory role in helping us achieve our goal of becoming the largest retail mortgage lender in the country.”

What that almost surely means is that THL isn’t investing nearly as much as it originally contemplated. The original investment was said to be more than $100 million. That bought the firm two board seats. How much less would it have to be to have no board representation at all?

In a release today, Guaranteed Rate described it as a “minority stake.” The original Dec. 14 announcement of the deal described it as a “meaningful minority stake.”

A spokesman declined to comment beyond the releases.

In either version, Ciardelli, who founded Guaranteed Rate 18 years ago and built it into a top 10 U.S. retail mortgage lender, was to retain operational control as chairman and CEO.

But, with THL having no board representation, Ciardelli clearly will have more autonomy in the future than he would have under the first version. That probably means he will have more of a say in how long Guaranteed Rate remains privately owned.

Taking on a private-equity investor typically means either a sale or a public offering within five years. But, without a board seat, THL may not be able to drive such an outcome within that time frame.

Ciardelli sought the institutional partner principally as a way to cash out early investors in his company.

Guaranteed Rate is on a campaign to hire mortgage lenders and said it has brought on nearly 400 so far in 2018.

Earlier:

Waiting, waiting: Guaranteed Rate deal still hasn’t closed

Guaranteed Rate founder sells large stake to Boston investment firm



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