Intercontinental Exchange to acquire Ellie Mae from Thoma Bravo in deal valued at USD11bn

Intercontinental Exchange (ICE) is to acquire Ellie Mae, a cloud-based platform provider for the mortgage finance industry from private equity firm Thoma Bravo in a deal valued at approximately USD11 billion. 

The deal, following ICE’s acquisition of a majority stake in MERS in 2016, and the remainder in 2018, and the acquisition of Simplifile in 2019, establishes ICE, through its growing ICE Mortgage Services network, as a leading provider of end-to-end electronic workflow solutions serving the evolving US residential mortgage industry.

Ellie Mae, based in Pleasanton, California with approximately 1,700 employees, was founded in 1997 with a mission to automate and digitalise the trillion-dollar residential mortgage industry. Through its Digital Lending Platform, Ellie Mae provides technology services to all participants in the mortgage supply chain, including its over 3,000 customers and thousands of partners and investors participating on their open network who provide liquidity to the market. Lenders rely on Ellie Mae to securely manage and facilitate the exchange of data across the ecosystem to enable the origination of mortgages while maintaining strict adherence to various local, state and federal compliance requirements.

“Twenty years after we founded Intercontinental Exchange to provide a transparent trading platform for the energy industry, and following two decades of providing continued innovation to help customers navigate global markets, we are pleased to announce the acquisition of Ellie Mae, which will help us similarly transform the mortgage marketplace,” says Jeffrey C Sprecher, Founder, Chairman and CEO of Intercontinental Exchange. “Our planned acquisition represents a one-of-a-kind opportunity to add an extraordinary enterprise with great leadership to our family. It will also enhance ICE’s growth strategy in mortgage technology, with complementary products and a wide array of customers and stakeholders who will benefit from our core and proven expertise in operating networks and marketplaces.”

Jonathan Corr, President and CEO of Ellie Mae, says: "We are excited to be joining the Intercontinental Exchange family and having the opportunity to work closely with Simplifile and MERS in helping our industry to realise the true digital mortgage. We have been on a journey, as we have long said, ‘to automate everything automatable’ for the mortgage industry, and joining ICE, which has followed a parallel journey in global exchanges, will allow us to further accelerate realising our vision. We also greatly appreciate, and have significantly benefited from, the operational and strategic support from Thoma Bravo. They were instrumental in helping us achieve this outcome, which is a great one for our customers and the industry in general.”

Since acquiring Ellie Mae, Thoma Bravo has partnered with its leadership team to nearly double revenue while achieving best-in-class profitability and driving continued innovation in Ellie Mae’s core products. The combination of Ellie Mae’s market-leading solutions with Thoma Bravo’s deep operational expertise helped the company redesign its organisational structure to scale more efficiently, transform its go-to-market organisation to better serve its existing customers, and focus on organic product innovation to drive long-term, sustainable growth. Thoma Bravo also worked closely with Ellie Mae to acquire Capsilon, a highly strategic acquisition that added significant product capabilities and greatly expanded the company’s total addressable market.

“We partnered with Jonathan Corr, Joe Tyrrell and the Ellie Mae team to advance their vision to automate the residential mortgage industry while also using Thoma Bravo’s deep software expertise to greatly improve the company’s operations and accelerate growth,” saisaysd Holden Spaht, a Managing Partner at Thoma Bravo. “We are confident that being part of ICE will enable Ellie Mae to continue transforming an industry still in the early innings of digitisation, and we look forward to following Ellie Mae’s continued success as part of ICE for many years to come.”

The entire production chain of the mortgage industry, from lead generation to application, to pre-closing, to closing, to post-closing, has traditionally been a highly document-centric and manual process. ICE’s acquisition of MERS and Simplifile has helped to automate the post-closing process. The addition of Ellie Mae extends ICE’s reach to the origination space.

In addition to its Digital Lending Platform capabilities and its vast partner network, Ellie Mae also provides technology solutions that enable its clients to achieve greater levels of consumer engagement, efficiencies through automation, and a modernisation of the loan manufacturing process through its recent introduction of machine learning and artificial intelligence. Through this complementary addition, ICE Mortgage Services will provide innovative technology that touches nearly every US mortgage, accelerating additional digitalisation and streamlining of the mortgage manufacturing process, and ICE Data Services will be able to add to its offerings.

“This transaction will benefit ICE and its shareholders,” says Scott Hill, Chief Financial Officer of Intercontinental Exchange. “The strength of our balance sheet, and the combined cash flows, position this deal to be accretive in the first full year and to meet all of our key strategic and financial acquisition criteria.” 

The transaction, which is not subject to a financing condition, is expected to close in the third quarter or early fourth quarter of 2020, following the receipt of regulatory approvals and the satisfaction of customary closing conditions.