Street Capital to be acquired by RFA Capital

Street Capital to be acquired by RFA Capital

Street Capital to be acquired by RFA Capital

Mortgage lender Street Capital is to become part of real estate investment company RFA Capital.

Street Capital Group Inc. has announced its agreement to be acquired by RFA for an aggregate consideration of around $85 million. The deal will provide immediate liquidity and certainty for the bank’s shareholders.

It will also give Street access to up to $5 billion in new mortgage funding and increase its equity capital by at least $50 million.

"This transaction creates significant and immediate value for Street Capital shareholders, will meaningfully improve our financial strength during this formative stage as a Schedule I bank, and positions the business for sustainable growth over the long term" said Duncan Hannay, Chief Executive Officer of Street Capital. "We look forward to partnering with RFA Capital, which brings a holistic solution to the business challenges and key risks we face."

Street Capital has been undergoing a review since early 2019 to find the best option to strengthen the capital position of the Bank and position the business for long term, sustainable growth.

Options considered include continuing its current business plan, capital raising, or the sale of certain assets.

The Board decided the RFA deal is the best option, while for RFA it is a good strategic fit.

"We believe that Street Capital represents a unique banking platform with potential for meaningful growth through leveraging our significant financial resources, mortgage industry expertise and key strategic partnerships,” said Ben Rodney, Managing Partner of RFA. “In addition to the infusion of capital into the Bank, we are committing to a number of new capabilities that will strengthen the business, reduce risk and enable the management team to overcome current barriers to sustained financial performance and growth. These capabilities include immediate access to our mortgage funding ecosystem."