Ocwen Financial Corp. this morning said it would raise $375 million of new equity and use some of the proceeds to buy $15 billion of mortgage servicing rights from JPMorgan Chase & Co.
According to a research note from Sterne Agee, Ocwen is actually paying a total of $950 million for the JPM MSRs, but the figure includes servicing advances.
When the advances are factored out of the equation, the MSRs are valued at $165 million or 110 basis points of UPB.
However, a subsequent look at the deal has the MSR price being as low as $82 million, said one analyst. “It's a good deal for Ocwen,” he said.
Overall, Ocwen priced 25 million shares of public common stock at $13 per unit.
The specialty servicer granted its underwriters a 30-day option to purchase up to 3.75 million additional shares to cover overallotments.
The transaction is expected to close on Nov. 16.
J.P. Morgan Securities LLC, B of A Merrill Lynch and Citigroup Global Markets Inc. are acting as joint book-running managers for the common stock offering. Keefe, Bruyette & Woods, Inc. is acting as co-manager.
