IndyMac Bancorp may let investors and employees have a piece of its fast-growing home equity conversion mortgage subsidiary.
IndyMac is "pretty close in deciding" whether to spin off a 25 percent to 40 percent stake of Financial Freedom Holdings Inc., according to the question and answer session of IndyMac's conference call Tuesday.
"We are seriously considering it," IndyMac Chairman and Chief Executive Michael Perry said. There's "a 75 to 90 percent chance that we're going to do it."
The Pasadena, Calif.-based thrift acquired Financial Freedom in 2004 for $68 million from Lehman Brothers. The current value of the reverse lender is estimated between $200 and $400 million, or a P/E multiple of 7 to 14 times earnings, according to IndyMac's earnings presentation.
Noting that Financial Freedom is the leading reverse lender, with a 50 percent market share, Perry said an IPO would allow the company to recruit and retain management with stock options and encourage the management team to grow the reverse unit's business.
Financial Freedom reported volume jumped 81% during 2005 to $2.9 billion.
"Our record production in the first quarter of 2006 is the result of strong production volume from our mortgage professionals channels, including conduit, and Financial Freedom," IndyMac said in its financial report.