Intercontinental Exchange buys Ellie Mae from Thoma Bravo for $11 billion

Jeff Sprecher, chief executive officer of Intercontinental Exchange Inc., continued his foray into the mortgage market with the purchase of cloud-based platform provider Ellie Mae.

Atlanta-based ICE, as the company is known, agreed to buy Ellie Mae from private equity firm Thoma Bravo LLC in a deal that values the mortgage-lending platform at about $11 billion. The owner of the New York Stock Exchange will pay a combination of stock and cash for Pleasanton, California-based Ellie Mae, according to a statement Thursday. Further terms weren’t disclosed.

Ellie Mae will allow ICE to expand its own mortgage-servicing business. In 2017, Sprecher said the mortgage market needed a complete overhaul to shift from a paper-based transaction system to an electronic method. “It’s so obvious to us that the market is going to become more electronified,” Sprecher said at the time.

In 2016, ICE gained a majority stake in Mortgage Electronic Registration Systems Inc., or MERS, which documents the ownership and resale of about half of U.S. home loans.

More than 40% of annual U.S. mortgage originations are processed using Ellie Mae software, according to Erica Bigley, a company spokesperson. That gives Ellie Mae insight into trends such as borrowers’ credit profiles and changing underwriting standards. ICE reported $90 million in mortgage-servicing revenue for the first half of 2020, a 40% increase from a year earlier. Sprecher has said that mortgage servicing is the fastest-growing business on the company’s platform.

“We have a business that is part of nearly every U.S. mortgage closing process, collecting, marshaling and storing critical data,” Sprecher said on an earnings call in July. “U.S. mortgage back-office workflow is ripe for automation and greater efficiency.”