Real Estate
Home›Real Estate›Mortgages›UWM raises $2.05B in preferred equity with Oaktree and…
UWM raises $2.05B in preferred equity with Oaktree and a rights offering
The deal includes $1.65 billion of preferred equity with a 10% cash coupon, plus 330 million warrants and a $400 million rights offering.
United Wholesale Mortgage, or UWM, is launching a $2.05 billion capital raise that combines $1.65 billion in preferred equity and a $400 million rights offering, alongside 330 million warrants, HousingWire reports. The preferred equity consists of $1.5 billion from Oaktree Capital Management and $150 million from the Ishbia family.
UWM president and CEO Mat Ishbia framed the transaction as a long-term partnership with Oaktree, saying during a 30-minute online Q&A that the firm brings strategic value tied to its mortgage servicing rights background. HousingWire reports that Oaktree has designated Nicholas Basso as a director and Dante Quazzo as a non-voting board observer.
The financing is structured to reduce leverage, but analysts cited by HousingWire said the higher cost and dilution may shift value away from common shareholders. UWM’s stock traded below $1 on Thursday morning, the day after the deal was announced.
The preferred equity carries a 10% cash coupon, or 13% if paid in kind, and the liquidation preference increases by 10% per year, according to HousingWire. UWM plans to use proceeds to repay 2027 senior notes and MSR financing facilities, and the outlet reports the expected cost of the preferred equity is $165 million, offset by an estimated $125 million in lower interest expenses.