California-based mortgage tech firm Blend Labs, which has pursued non-GAAP profitability since it went public in 2021, announced a $150 million investment on Monday from private equity firm Haveli Investments.
Blend will use $145 million of the proceeds to repay existing credit agreements. The remainder is for general corporate purposes, the company said in a prepared statement.
Despite the challenging mortgage landscape, Blend has narrowed its losses. In 2023, its non-GAAP net loss shrank to $97.4 million, down from $182.2 million in 2022. By the end of December 2023, the company had cash, cash equivalents and marketable securities totaling $144.2 million. Its total outstanding debt was at $140 million in the form of Blend’s term loan.
Nima Ghamsari, co-founder and CEO of Blend, said the investment “reflects confidence in Blend’s continued journey to transform financial services and is an important show of faith in our growth strategy.”
In return for its investment, Haveli will receive Blend Series A convertible preferred stock at an initial conversion price of $3.25 per share — to be converted into common stock at any time — representing a 31% premium to its closing price on Friday.
In addition, Blend issued Haveli warrants for 11 million shares of Class A common stock at $4.50 each, an 81% premium above Friday’s closing price. The warrants represent $50 million and are exercisable for 24 months.
Brian Sheth, chief investment officer of Haveli who is joining Blend’s board, said that Haveli has known the Blend team “several years.“ He added that with a “blue-chip customer base and an improved balance sheet,” Blend is well positioned.
Financial Technology Partners was the financial adviser for Blend, and Jefferies LLC worked as a financial adviser to Haveli.
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