Velocity Financial’s $45 Million Series A Convertible Preferred Stock and Warrants


Simpson Thacher advised Velocity Financial, Inc. on the deal.

Velocity Financial Inc. issued $45 million of series A convertible preferred stock and warrants to purchase shares of the company’s common stock in a private placement.

Under a securities purchase agreement that Velocity Financial entered into with investment funds managed by Snow Phipps Group LLC and TOBI III SPE I LLC, the company will issue an aggregate of 45,000 newly issued shares of series A convertible preferred stock and warrants to purchase an aggregate of 3,013,125 of its common shares in exchange for cash consideration in an aggregate amount of $45 million.

The company intends to use the net proceeds from the private placement to pay down its existing warehouse repurchase lenders and for general corporate purposes.

JMP Securities LLC acted as financial adviser to Velocity Financial.

Based in Westlake Village, California, Velocity is a vertically integrated real estate finance company that primarily originates and manages investor loans secured by 1-4 unit residential rental and small commercial properties. Velocity originates loans nationwide across an extensive network of independent mortgage brokers it has built and refined over 15 years. Velocity is publicly traded on the New York Stock Exchange under the symbol “VEL.”

The Simpson Thacher team included Bill Brentani (Picture), Dan Webb and Ryan Coombs (Capital Markets); Eric Swedenburg, Matt Gabbard and Usman Liaqat (M&A); Kelli Schultz and Christine Paster (Public Company Advisory Practice); Tristan Brown and Alyssa Ohanian (Executive Compensation and Employee Benefits); and Katharine Moir and Joseph Tootle (Tax).

Involved fees earner: William Brentani – Simpson Thacher & Bartlett; Tristan Brown – Simpson Thacher & Bartlett; Ryan Coombs – Simpson Thacher & Bartlett; Matthew Gabbard – Simpson Thacher & Bartlett; Usman Liaqat – Simpson Thacher & Bartlett; Katharine Moir – Simpson Thacher & Bartlett; Alyssa Ohanian – Simpson Thacher & Bartlett; Christine Paster – Simpson Thacher & Bartlett; Kelli Schultz – Simpson Thacher & Bartlett; Eric Swedenburg – Simpson Thacher & Bartlett; Joseph Tootle – Simpson Thacher & Bartlett; Daniel Webb – Simpson Thacher & Bartlett;

Law Firms: Simpson Thacher & Bartlett;

Clients: Velocity Financial;

Author: Ambrogio Visconti