Black Knight Purchases Optimal Blue For $1.8B

GTCR signed an agreement to sell Optimal Blue to Black Knight for $1.8 billion, payable in cash.

Optimal Blue was founded in 2002 and operates a digital marketplace for residential mortgage loans. It has connected 3,500 mortgage lenders and brokers with 185 mortgage investors via a digital network for nearly $2 trillion of transactions annually and with more than 240 million pricing quotes per year responsible locks 35% of all mortgages completed nationwide.

Black Knight is a leading provider of integrated software, data and analytics to the mortgage and real estate industries. In connection with the acquisition, Black Knight will combine its Compass Analytics business with Optimal Blue in a newly formed entity with minority co-investors Cannae Holdings, Inc. and Thomas H. Lee Partners, L.P. Black Knight will own approximately 60% of the new entity.

"Optimal Blue is a business that we have respected for many years. By bringing Optimal Blue into the Black Knight family, we will be adding industry-leading product, pricing and eligibility capabilities to our ... set of solutions and enhancing our already comprehensive data and analytics capabilities," said Anthony Jabbour, CEO of Black Knight.

Optimal Blue's Resitrader is an online loan trading platform delivered in a secure, cloud-based platform that connects investors to a large base of sellers. By adding Black Knight's comprehensive origination and servicing data assets to the Resitrader loan trading platform, Black Knight will be able to deliver the ability to buy and sell new and seasoned loans via this platform. 

GTCR partnered with industry veteran Scott Happ, founder and former CEO of Mortgagebot, to acquire Optimal Blue in July 2016. Under Happ's leadership, the company executed a strategic transformation to an open, real-time, cloud-based marketplace operator positioned at the center of the secondary mortgage market. It also broadened its core product offerings in compliance, data analytics and mortgage insurance distribution.

"Scott Happ and the entire Optimal Blue team have built a truly remarkable company by investing in people and technology, resulting in accelerated growth and a transformed role within the mortgage industry," said Aaron Cohen, managing director at GTCR.

In an email to NMP, Collin Roche, GTCR managing director, explained that GTCR decided to sell now because it established a strategic plan with Happ when the private equity firm bought the business four years ago. That involved repositioning the business and driving growth and innovation in its technology and product offerings. "We also completed several acquisitions," he added. "We have substantially achieved the plan that we laid out, and the business has grown tremendously, so it made sense to explore options for [Optimal Blue]. The company also has great growth potential, and that might best be realized as part of a larger industry player with the scale and scope of Black Knight."

The transaction is expected to be completed in the third quarter pending the normal regulatory approvals.

Click here to learn more about the Black Knight's purchase of Optimal Blue.