Product and pricing engine software vendor Optimal Blue will be acquired by private equity firm GTCR in a deal that will place mortgage technology veteran Scott Happ in the role of CEO.

Financial terms of the sale were not disclosed, but the Chicago-based investor has committed up to $350 million in equity capital for growth initiatives and acquisitions at Optimal Blue, GTCR said in a June 16 news release. The deal is expected to close in mid-July.

"From a high-level perspective, we're looking at mortgage technology solutions that will enhance Optimal Blue's existing network and other solutions that will assist in the loan origination process," GTCR Managing Director Aaron Cohen said in an interview.

Happ founded Mortgagebot in 1997 and ran the point of sale system vendor as CEO until it was sold to Canadian fintech conglomerate DH Corp. for $232 million in 2011.

"The lovely thing is that Optimal Blue operates at the same point of the mortgage chain that Mortgagebot did, at the point of sale," he said in an interview. "It's the same space that we played in before. A lot of the same knowledge will be applicable to what we're doing with Optimal Blue."

GTCR will also bring in former Mortgagebot senior vice president Sue Baker to serve as vice president of product of Optimal Blue, which is headquartered in the Dallas suburb of Plano.

"We've had a relationship with [Happ] for quite some time," Cohen said. "We both have a very similar thesis around the need to use more software in the mortgage origination process."

GTCR's interest in Optimal Blue, in particular, extended out of trends it perceived in the mortgage industry, Cohen said.

"Mortgage costs are increasing very rapidly, primarily related to the increased scrutiny and regulatory requirements at the local, state and federal level, so there's an opportunity to automate many processes," which would help to lower costs and to provide documentation for auditing needs, he said.

Private equity firm Serent Capital invested in Optimal Blue in 2013 and was rumored to have put the company up for sale earlier this year. Optimal Blue acquired its top competitor LoanSifter shortly after the Serent investment, and the PE firm would later go on to acquire appraisal technology firm Mercury Network in 2015.

Optimal Blue co-CEOs Larry Huff and Ivan Darius will continue to have a role in the company they co-founded in 2002, along with other members of the existing management team. Cohen noted that Huff and Darius "were looking to step back from day-to-day leadership."

GTCR has invested more than $12 billion in over 200 companies since it was founded in 1980. It purchased HomeBanc Mortgage Corp. in 2000 and then spun it off into a real estate investment trust. And GTCR's Zenta subsidiary, which was previously known as H-Cube, purchased Global Realty Outsourcing in 2006. Accenture acquired Zenta in 2011.

"Optimal Blue is unique because it's the only mortgage technology that actually has a network that connects originators with investors…and allows the issuers to provide pricing data and other critical data with originators," said Cohen.

"As the service and functionality continues to permeate all the different functions of the mortgage origination process, you become key in describing that process to auditors and regulators," Huff added in an interview. "As the loan is processed and underwritten and eventually hedged and sold, it takes on different characteristics. We're able to describe those characteristics."

Taking the reins at Optimal Blue marks Happ's first major foray back into the mortgage technology sector since he left Mortgagebot at the end of 2012 following its acquisition of loan origination system vendor Avista Solutions. DH Corp has since combined the Mortgagebot and Avista systems to create a single, end-to-end LOS.

In 2014, Happ joined ExactBid as board chairman and joined the board of ClosingCorp earlier this year.

GTCR was advised by Stephens Inc. and Optimal Blue was advised by FT Partners.

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