BlackRock, Blackstone eye Rescap: sources
GMAC's Residential Capital unit is attracting early buyer interest from companies including BlackRock Inc and Blackstone Group, but a deal for the troubled mortgage lender is going to be difficult to pull off, sources familiar with the matter said.
Others that could be interested in ResCap include investor Wilbur Ross, said the sources, who declined to be named because the process is private.
A group of big funds has also put together a management team to explore a bid for ResCap, one of the sources said.
GMAC, majority-owned by the U.S. government after multiple bailouts, has hired Goldman Sachs and Citigroup Inc to advise on a range of issues, including strategic alternatives for the mortgage business and repayment of taxpayer funds, sources said.
The process to sell ResCap is still in the early stages, although GMAC has received several interesting inquiries, according to those sources.
We are currently evaluating strategic alternatives for the mortgage business with a goal of containing risk and preserving value in the business, GMAC said on Tuesday.
Blackstone, BlackRock, Goldman and Citigroup declined comment. Wilbur Ross was not immediately available.
GMAC has said its auto finance business was consistently profitable during 2009, but the mortgage unit has run up billions of dollars of losses.
The government holds a 56.3 percent stake in GMAC as a result of capital infusions totaling more than $17 billion, including a $3.8 billion investment on December 30.
Private equity firm Cerberus Capital Management LP CBS.UL owns 14.9 percent of the company, while General Motors GM.UL owns 6.7 percent.
GMAC recently put in about $2.8 billion into ResCap to shore up the business. It has also been growing deposits at its Ally Bank to increase its overall funding flexibility.
The problems at the mortgage unit mean that any buyer would have to figure out how to not only pay for it, but how to fund the business going forward, one of the sources said.
A buyer would also have to contend with any liabilities from warrantees to Fannie Mae and Freddie Mac, sources said.
DECENT INTEREST
Lenders face increasing demands by investors to repurchase delinquent loans that fell short of stated underwriting standards or representations and warranties.
Mortgage insurers have also ramped up demands that lenders take greater responsibility for bad loans.
Still, another source said there was decent interest in ResCap, whose mortgage servicing and origination infrastructure and employees could be attractive to firms looking for a platform.
Its loan assets could also be of interest to funds that were created to invest in distressed mortgages but have seen little come up for sale, the source said.
You've got a lot of money just dying to be put to work against distressed mortgages, the source said. Anytime a pool comes up, it is generally overbid.
Some of these potential bidders at least could muster the financial muscle to pull off a deal.
BlackRock is the world's largest asset manager, while Blackstone is one of the largest and most powerful private equity firms.
Blackstone also owns a substantial stake in Bayview Asset Management, a full-service real estate investment and mortgage finance firm.
Ross, who founded private equity firm WL Ross & Co, is known for restructuring distressed companies.
He bought the servicing business of American Home Mortgage after the mortgage provider's 2007 bankruptcy.
In 2008, he bought H&R Block Inc's subprime mortgage servicing operations for $1.3 billion.
(Additional reporting by Al Yoon)
(Reporting by Paritosh Bansal and Megan Davies; editing by Carol Bishopric and Ted Kerr)
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