MBS investor Ellington Financial priced its IPO of 4,500,000 common shares representing limited liability company interests at a price of $22.50 per share, according to a release from the specialty finance company.
The gross proceeds of the IPO are expected to be $101.25 million, assuming the underwriters' over-allotment option is not exercised. Ellington Financial intends to use a considerable part of the offering's net proceeds to buy non-agency and agency RMBS and other targeted assets, such derivatives.
It will also use the balance of the net proceeds, if any, for working capital and general corporate purposes, the firm's release said. The offering is expected to close on Oct. 14. Deutsche Bank Securities acted as the sole book-running manager and Cantor Fitzgerald was a co-manager on the transaction.
This is not Ellington Financial's only attempt to launch an IPO. According to a previous report from ASR sister publication National Mortgage News back in December 2009, it had pulled its planned initial public offering because of a lack of investor interest at that time.
Ellington is managed and advised by former Kidder Peabody head MBS trader and market veteran Michael Vranos' Ellington Management Group (EMG).
According to its Web site, Ellington's pursues value across various types of MBS and related assets. By considering all sectors of the MBS markets and by leveraging the resources of EMG, the company said it is able to identify value dislocations and trends within the industry, and to capitalize on the available market opportunities.
Its approach to MBS investing focuses mostly on the development of proprietary credit, interest-rate, and prepayment models as well as other proprietary research and analytics. It's target asset classes are loans and MBS, mortagage-related derivatives, and coprorate debt and equity securities and derivatives.
In non-agency RMBS, Ellington buys prime jumbo, Alt-A and subprime mortgages, fixed rate mortgages, ARMs, option ARMs, neg-am ARMs and hybrid ARMs first lien and second lien mortgages, manufactured housing loans as well as IOs, POs, IIOs and inverse floaters.
For agency RMBS, it invests in whole pool and TBA mortgage passthrough certificates. It also purchases CMBS and residential whole mortgage loans.
In terms of its mortgage-related derivatives activities, it focuses on credit default swaps on individual RMBS, on the ABX and CMBX indices and on other mortgage-related indices and other mortgage-related derivatives.