Mortgage Spinoff Will Create $430M for Fidelity National Financial, T.H. Lee

NEW YORK ( TheStreet) -- Black Knight Financial Services will look to raise up to $430 million in an initial public offering expected to price next week.

The Jacksonville, Fla., mortgage-technology company is being spun out of publicly traded title insurer Fidelity National Financial (FNF). Fidelity National will control at least 55% of the voting shares of the company following next week's offering, according to a filing Monday with the Securities and Exchange Commission in preparation for the IPO. Private-equity firm Thomas H. Lee Partners, meanwhile, will have a 27% voting stake once the offering is complete.

At the midpoint of proposed price range of $22-$25, Black Knight, which will trade under the ticker BKFS, would have a market capitalization of $3.5 billion. That will make it the fifth-largest IPO this year, according to Renaissance Capital, an IPO exchange-traded fund manager.

Black Knight bills itself as providing tools to help banks and other mortgage originators and servicers comply with increasingly demanding industry regulations. However, it has a history of its own difficulties with regulators. Its legacy business, Lender Processing Services, has "incurred substantial costs associated with the settlement of a number of inquiries made by governmental agencies and claims made by several litigants concerning various current and past business practices," the prospectus states.

Among those costs was a $127 million settlement with 46 states in 2013 over issues such as improper foreclosure documentation, an industry-wide problem popularly known as "robosigning."

Fidelity National acquired LPS in a $2.9 billion deal completed at the start of 2014.

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