Skip to main content

Market Overview

Exclusive: Finance Of America CEO Talks SPAC Deal, Diversification, Growth Ahead

Share:
Exclusive: Finance Of America CEO Talks SPAC Deal, Diversification, Growth Ahead

Finance of America CEO Patti Cook joined the SPACs Attack show on Benzinga to discuss the company’s SPAC merger and what’s ahead for the company.

SPAC Deal: Finance of America is set to merge with Replay Acquisition Corp (NYSE: RPLA).

“It was always our intention to take Finance of America public,” Cook told Benzinga.

The sponsors of the SPAC drew Finance of America into choosing this route to go public over a traditional IPO. Cook pointed to the SPAC management teams’ pedigree and background being accretive to Finance of America.

The SPAC merger is on track to be completed by the end of the first quarter or early April, Cook said.

About Finance Of America: The soon-to-be public company offers home loans, reverse mortgages, commercial loans, lender services and more to customers.

Finance of America has a motto of “customer first, last and always.” The philosophy has helped the company maintain high net promoter scores and also strong recapture rates, she said. 

“They come back without us even soliciting.”

Different From Competitors: Finance of America operates in similar markets to companies like Rocket Companies Inc (NYSE: RKT) and UWM Holdings Corp (NYSE: UWMC), but is more diversified, Cook said. 

“Finance of America was built purposely to generate cycle resistant earnings,” she said.

The company added complimentary businesses to diversify itself from solely being a mortgage business, Cook told Benzinga. 

Reverse mortgages, commercial lending and title and appraisal are services offered to help diversify the business model.

Cook said the company will continue to add complimentary businesses.

“Rocket is a great company with great technology, great story,” she said, adding that Rocket’s business is highly correlated to the mortgage market.

Finance of America can maintain a steady level of growth even if the mortgage market declines, unlike some competitors, the CEO said.

Related Link: EV Manufacturer Arrival Talks SPAC Deal, Benefits Of Business Model

The Growth Outlook: In 2021, Finance of America expects to grow its agriculture loans to farmers. The segment had sales of $50 million last year.

Cook told Benzinga the ag loan business could have sales of $500 million in 2021 and become a $1-billion business for Finance of America in the future.

The company also is expanding into the home improvement sector, which Cook said was “such a great add on for Finance of America.”

Financials: Finance of America has shown consistent financial growth, which was one of the topics covered during the interview with Benzinga.

“We generate a fair amount of free cash flow,” Cook said.

When asked about issuing a dividend to shareholders, Cook named several other areas the company would focus on first.

Free cash flow will be used to grow the business either organically or through acquisitions. If cash is left after that, the balance sheet and debt rating could be considered by the company, she said.

If all of those items are met, Finance of America will look at share buybacks and/or dividends, Cook said. 

See also: How to Invest in SPACs 

 

Related Articles (RPLA)

View Comments and Join the Discussion!

Posted-In: Finance of America mortgageM&A Small Cap Exclusives Trading Ideas Interview Real Estate Best of Benzinga