Ellington Raises $108 For Mortgage Fund In IPO

Oct 7 2010 | 12:30pm ET

The price finally right for investors, Ellington Management has managed to secure enough buyers for the initial public offering of its three-year-old subprime mortgage fund.

Underwriters Deutsche Bank and Cantor Fitzgerald appear to have drummed up enough buyers to ensure that the Ellington Financial IPO is pre-sold. But the oft-delayed offering is much smaller than originally planned: When Ellington chief Michael Vranos announced its launch, he said he hoped to raise $750 million in permanent capital for it. An aborted IPO 10 months ago sought $208 million. Today, the fund hopes to raise $108 million.

Still, Ellington appears to have done well enough. Bloomberg News reports that the shares sold for between $22 and $24 for an average discount of about 9.1% to its claimed book value of $25.31 per share. That’s substantially more than anchor investors Legg Mason, which owns 21% of the fund, and FBR Capital Markets, which owns 12%, value their stakes at.

Most of the proceeds of the IPO are to be for investments.

Ellington Financial managed $246 million at the end of June. The fund returned 43% last year and is up 7.3% this year.


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