ICE’s Sprecher Boosts Mortgage Business With Ellie Mae Deal

NYSE Owner to Buy Mortgage Platform Ellie Mae for Cash, Stock

07 Aug 2020, 03:06 PM IST

(Bloomberg) -- Jeff Sprecher, chief executive officer of Intercontinental Exchange Inc., continued his foray into the mortgage market with the purchase of cloud-based platform provider Ellie Mae.

Atlanta-based ICE, as the company is known, agreed to buy Ellie Mae from private equity firm Thoma Bravo LLC in a deal that values the mortgage-lending platform at about $11 billion. The owner of the New York Stock Exchange will pay a combination of stock and cash for Pleasanton, California-based Ellie Mae, according to a statement Thursday. Further terms weren’t disclosed.

Ellie Mae will allow ICE to expand its own mortgage-servicing business. In 2017, Sprecher said the mortgage market needed a complete overhaul to shift from a paper-based transaction system to an electronic method. “It’s so obvious to us that the market is going to become more electronified,” Sprecher said at the time.

In 2016, ICE gained a majority stake in Mortgage Electronic Registration Systems Inc., or MERS, which documents the ownership and resale of about half of U.S. home loans.

Ellie Mae

More than 40% of annual U.S. mortgage originations are processed using Ellie Mae software, according to Erica Bigley, a company spokesperson. That gives Ellie Mae insight into trends such as borrowers’ credit profiles and changing underwriting standards. ICE reported $90 million in mortgage-servicing revenue for the first half of 2020, a 40% increase from a year earlier. Sprecher has said that mortgage servicing is the fastest-growing business on the company’s platform.

“We have a business that is part of nearly every U.S. mortgage closing process, collecting, marshaling and storing critical data,” Sprecher said on an earnings call in July. “U.S. mortgage back-office workflow is ripe for automation and greater efficiency.”

Bloomberg LP, the parent of Bloomberg News, competes with ICE in offering mortgage-related data and analysis.

Intercontinental Exchange shares dipped as much as 2% in extended New York trading after the announcement. They rose $1.30 to $97.46 in regular trading and have gained 5.3% this year.