Blackstone, PMI Make a Deal

Blackstone Tactical Opportunities has made another move in the residential mortgage business.

By Barbra Murray, Contributing Editor

Blackstone Tactical Opportunities makes another move in the residential mortgage business with the acquisition of a significant equity stake in PMI Group, the holding company of a residential mortgage insurance provider. Both parties are remaining mum on dollar signs and percentages.

There’s more to the deal than Blackstone’s grabbing a share of PMI.  In conjunction with the acquisition, the global investment firm has committed to extending PMI a loan, the proceeds of which will be utilized for working capital needs, including the financing of PMI’s investment strategy. And that strategy may involve using proceeds to raise more capital.

“Blackstone is well positioned to help the company achieve its strategic objectives and maximize value for all shareholders,” Naveen Bhatia, principal with Blackstone Tactical Opportunities, said in a prepared statement. Two years ago, PMI emerged from bankruptcy protection after its chapter 11 plan of reorganization was confirmed by order of the United States Bankruptcy Court for the District of Delaware.

In return for the loan, PMI will give Blackstone warrants and other rights, one of which is the right to participate in future equity offerings. Blackstone will also nominate a director to PMI’s board.

For Blackstone, the purchase of a stake in PMI marks one of a handful of transactions the company has closed in the residential mortgage business over the last year. In January, funds managed by Tactical Opportunities joined forces with TPG Special Situations Partners on an agreement to acquire London-based Acenden Mortgage Servicing Solutions from the administrators of Lehman Bros. And last fall, funds managed and/or advised by Tactical Operations partnered with TSSP on a deal to purchase specialty U.K. residential mortgage lender Kensington from Invesco plc.

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