Altisource Is Said to Tap Guggenheim for Lenders One Sale

(Bloomberg) — Altisource Portfolio Solutions S.A., a tech-enabled mortgage services company, is working with Guggenheim Partners on a potential sale of its origination business amid a boom in activity among lending platforms, according to people with knowledge of the matter. 

The investment bank began reaching out this week to potential buyers for Lenders One, said the people, who asked not to be identified because the information isn’t public. The unit is expected to draw interest from strategic and private equity suitors, the people said. 

Altisource said in July that it would consider selling the unit after competitors raised money at attractive valuations, though it didn’t disclose an adviser, according to a release.

A spokesperson for Altisource declined to comment beyond the statement in July when it reported earnings. A representative for Guggenheim declined to comment.

Thoma Bravo-backed MeridianLink Inc., which provides software to banks and credit unions to help them make loans and set up deposit accounts, went public in July at a valuation of $2.1 billion. That’s 19 times its expected adjusted earnings before interest, taxes, depreciation and amortization for 2021. That followed an IPO by lending platform Blend Labs Inc., which raised $360 million in a public market debut that valued it at more than $5.8 billion. Blend had a net loss of $75 million last year and is projected to generate negative Ebitda this year. 

Altisource manages Lenders One, a mortgage cooperative, but doesn’t own it, according to regulatory filings. The cooperative originates about 15% of U.S. residential mortgages, according to a company presentation in July. The platform helps mortgage lenders sell loans for more money and reduce the cost to manufacture a loan, Altisource Chief Executive Officer William Shepro said on an earnings call July 29, according to the transcript. 

Service revenue in the origination unit increased to $14.5 million in the three months that ended in June, 16% more than the previous year. Its default business has been “severely” impacted by the pandemic but the company expects revenue to increase again next year after foreclosure and eviction moratoriums imposed by the federal government expire. 

Altisource fell 4.8% to $10.80 in New York trading Tuesday, giving the company a market value of about $172 million. 

(Updates with response in fourth paragraph)

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