By Saabira Chaudhuri
Zais Financial Corp., an affiliate of New Jersey-based hedge fund Zais Group LLC, said its initial public offering of 5.7 million shares has priced at the expected per-share price of $21.25.
Zais in January filed plans for an IPO of up to $140 million. On Friday, the company said it expected gross proceeds from the offering of about $120.1 million.
Zais Financial is a real-estate investment trust that focuses on buying and managing residential mortgage-backed securities. The company was launched in July 2011, and is managed by Zais REIT Management LLC, a unit of Zais Group. The parent company, Zais Group, was formed in 1997 by former J.P. Morgan Chase & Co. (JPM) executive Christian Zugel and has roughly $5.5 billion of assets under management.
For the nine months ended September 2012, Zais Financial posted a profit of $17.6 million. Its net interest income in that period was $6.1 million, and the company reported $15.9 million in unrealized gains on real-estate securities.
By comparison, from the date of its launch in July 2011 to December 2011, Zais Financial reported a loss of $5.1 million, with $3.32 million in interest income and a $6 million unrealized loss on real-estate securities.
The company said its strategy is to focus on residential mortgage-backed securities that aren't backed by government agencies, targeting securities that were given the highest rating when they were issued. Zais Financial said it expects over time to primarily purchase residential whole loans, and eventually to include newly originated loans.
The IPO is expected to close around Feb. 13.
The company intends to list on the New York Stock Exchange under the symbol ZFC.
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