UPDATE 2-Western Alliance to buy mortgage firm AmeriHome for $1 bln

(Adds CEOs comments, details, context)

Feb 16 (Reuters) - Western Alliance Bancorp said on Tuesday it would buy mortgage servicer AmeriHome for about $1 billion in cash, in a deal that would strengthen the bank’s home finance business.

Backed by private equity firm Apollo Global Management and its insurance affiliate Athene Holding, Thousand Oaks, California-based AmeriHome acquires and services mortgages originated by a network of brokers and financial institutions across the United States.

The deal, partially funded by a $275 million sale of new Western Alliance shares, would boost the bank’s fee income and generate enough revenue to quickly cover the purchase price, Western Alliance Chief Executive Ken Vecchione told Reuters.

News of the sale comes four months after AmeriHome had announced plans for an initial public offering (IPO) that would have valued it at more than $1.3 billion. The offering did not go ahead.

Mortgage firms have struggled to attract investors to share offerings due to concerns mortgage activity may have peaked in 2020 as consumers took advantage of historically low interest rates to refinance existing home loans.

Earlier this month, mortgage lender loanDepot Inc slashed its IPO size and share sale price to ensure it could complete its listing.

Vecchione told Reuters he believed Western Alliance was getting “a fairly priced deal,” and the bank used AmeriHome’s 2019 financial results when evaluating whether to buy the company, to allow for last year’s elevated business levels.

AmeriHome Chief Executive Jim Furash, who will continue to lead the company as a unit within Western Alliance post-completion, added that AmeriHome’s business was weighted more towards new mortgages, which sheltered it from lower refinancing activity expected in 2021.

Evercore and Guggenheim Securities were the financial advisers to Western Alliance on the deal, which is expected to close in the second quarter of 2021. Houlihan Lokey Capital and Wells Fargo Securities advised AmeriHome. (Reporting by Niket Nishant in Bengaluru and David French in New York; Editing by Shailesh Kuber, Maju Samuel and Sonya Hepinstall)