Bass-Backed NMI Prices Share Sale at Top of Range

NMI Holdings Inc. (NMIH), the mortgage insurer backed by Kyle Bass and Carlyle Group LP (CG), raised $27.3 million in a public offering after selling shares at the top of their marketed range, valuing the company at about $750 million.

NMI sold 2.1 million shares and investors offered 3,395 for $13 apiece, the company said in a statement today. The previous range announced by Emeryville, California-based NMI was $11 to $13 a share.

NMI’s is the second offering of a mortgage insurer in about a week. Fueled by a strengthening housing market, Essent Group Ltd. (ESNT) has jumped 25 percent since selling shares Oct. 30 at $17 each. Radian Group Inc. (RDN) and MGIC Investment Corp. (MTG) sold stock and bonds this year to replenish capital drained in the crisis and boosted sales as U.S. government agencies reduce their role in mortgage coverage.

“The market-share opportunity created by the government’s retreat is the main driver, against the backdrop of an improving housing market,” Mark Palmer, an analyst at BTIG LLC, said by phone before NMI’s share sale was priced. “What we’re looking at here is an opportunity to grab a larger piece of a growing market.”

FBR & Co. managed the offering. NMI will be listed on the Nasdaq Stock Market under the symbol NMIH, after trading on the FBR Plus system. The valuation of about $750 million is based on the 57.7 million shares that were expected to be outstanding after the offering, according to a Nov. 1 filing.

Home Prices

NMI was started in 2011, raised $510 million from investors in 2012 and sold its first coverage this year. Led by Chief Executive Officer Bradley Shuster, NMI had insured 22 loans as of Sept. 30, while Essent backed more than 120,000. NMI also reached a deal in July with Fannie Mae to cover a pool of about $5 billion of mortgages.

Bass’s Hayman Capital Management LP owned about 10 percent of the company before the sale, the filing show. Claren Road Asset Management LLC, the hedge fund majority-owned by Carlyle, was NMI’s largest investor with an almost 13 percent stake.

Mortgage insurance is typically required when buyers pay less than 20 percent of the cost of a house up front. The policies cover losses when homeowners default and foreclosures fail to recoup costs.

In the 12 months through August, home prices in 20 U.S. cities increased about 13 percent, the biggest jump in seven years, according to the S&P/Case-Shiller index. Shares of MGIC and Radian have both doubled this year.

To contact the reporter on this story: Zachary Tracer in New York at ztracer1@bloomberg.net

To contact the editor responsible for this story: Dan Kraut at dkraut2@bloomberg.net

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