(Reuters) - Private equity-backed EverBank Financial Corp EVER.N said it would buy GE Capital’s Business Property Lending Inc division for $2.51 billion to boost its ability to lend to small and mid-size companies, driving up its shares more than 4 percent.
EverBank, which went public in May and has a market value of about $1.3 billion, has used acquisitions to diversify its operations and increase its assets. The lender agreed to buy MetLife Inc’s (MET.N) warehouse finance business in February.
The latest deal includes about $2.44 billion of performing commercial loans, origination and servicing platforms, and servicing rights on $3.1 billion of loans securitized by GE Capital.
The purchase will “meaningfully diversify our loan portfolio and our earnings mix,” EverBank Chief Executive Robert Clements said in an interview.
The Jacksonville, Florida-based bank has emerged as an acquirer as some rivals are shedding assets to build capital. The latest deal was in the works for about a year, with talks heating up in recent months, Clements said.
EverBank plans to focus on integrating the division and its MetLife purchase, but could make more deals, Clements said. “If the right opportunity came along, we would pursue it,” he said.
EverBank said it expected the deal to immediately boost earnings per share by a low double-digit percentage.
It will pay for the unit using existing cash, securities and undrawn funding lines, a company executive said on a conference call to discuss the deal.
The combined company will have pro-forma assets of about $16.2 billion. EverBank had assets of $13.8 billion at March end.
EverBank expects Business Property Lending to originate between $500 million and $1 billion in loans a year in the “intermediate term.”
GE Capital curtailed lending by the division, which had once originated more than $4 billion a year in loans, after the financial crisis. The division has originated $317 million in loans so far this year.
Clements said GE Capital did a good job of retaining the division’s management team and employees during this pullback. EverBank plans to keep the business intact, he said.
The overall commercial real estate market remains “lumpy,” but Business Property Lending focuses on a niche - owner-occupied properties used by small and mid-size companies - that is faring better, Clements said.
“We believe this segment of the market is rebounding and a lot of the companies that this business lends to have really weathered the economic storm,” he said.
EverBank, which counts private equity firms TPG, Sageview Partners and New Mountain Partners as investors, said the deal is expected to close in the fourth quarter.
The bank’s shares rose 4.4 percent to $11.35 on Monday.
Reporting by Jochelle Mendonca in Bangalore and Rick Rothacker in Charlotte, North Carolina; Editing by Viraj Nair, Maju Samuel and Gunna Dickson