SAN FRANCISCO - Blend Labs , Inc. (NYSE: BLND), a provider of cloud banking services, has received a significant financial boost with a $150 million investment from Haveli Investments, an Austin-based private equity firm. The investment, announced today, is in the form of convertible preferred stock and comes at a time when Blend plans to repay its existing credit obligations and strengthen its balance sheet for future growth.
The transaction involves Haveli purchasing Series A convertible preferred stock, with an initial conversion price of $3.25 per share. This price is a 31% premium over Blend's closing stock price on April 26, 2024. Additionally, Blend has issued Haveli a warrant to buy roughly 11 million shares of Class A common stock at $4.50 per share, exercisable over the next 24 months.
Nima Ghamsari, Co-founder and Head of Blend, expressed the company's anticipation for the partnership with Haveli, highlighting the shared vision to innovate and provide value in financial services. Brian Sheth, Chief Investment Officer of Haveli Investments, will join Blend's Board of Directors, marking a strategic move that aligns with the investment.
Blend, known for its software that is utilized by a range of financial institutions, including banks and credit unions, aims to use the investment to repay approximately $145 million of debt under its existing credit agreement. The remaining funds are earmarked for general corporate purposes.
The investment terms allow for conversion of the preferred stock into Class A common stock at any time, with provisions for both parties regarding repurchase and redemption after certain periods. The deal reflects confidence in Blend's growth strategy and its potential to succeed with its next-gen platform.
Blend has scheduled a live webcast for today at 6:00 pm ET to discuss the investment details, with a replay available on the company's investor relations website. Additionally, an earnings conference call is set for Wednesday, May 8, 2024, to go over the first quarter financial results.
Financial Technology Partners and Wilson Sonsini Goodrich & Rosati served as advisors to Blend, while Jefferies LLC and Bailey Duquette P.C. advised Haveli Investments.
InvestingPro Insights
As Blend Labs Inc. (NYSE: NYSE:BLND) embarks on a new chapter with the recent investment from Haveli Investments, the financial data and metrics provided by InvestingPro offer a deeper look into the company's current market position. With a market capitalization of $573.41 million, the company's valuation reflects its standing in the industry, despite a challenging revenue growth trajectory over the last twelve months, which saw a decline of 33.31%.
Investors may also find the InvestingPro Tips particularly insightful. For instance, Blend's high shareholder yield is a positive sign, indicating that the company is returning value to its shareholders. On the other hand, the fact that analysts do not anticipate Blend to be profitable this year, coupled with a poor free cash flow yield, suggests that potential investors should exercise caution and consider the long-term growth strategy and execution capabilities of the company.
InvestingPro also highlights that Blend has experienced a large price uptick over the last six months, with a six-month price total return of 106.67%. This could signal investor optimism about the company's future despite not being profitable over the last twelve months. The additional 10 InvestingPro Tips available on the platform could provide further clarity on Blend's financial health and future prospects. To access these tips and more detailed analysis, interested readers can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
With Blend's next earnings date scheduled for May 8, 2024, investors will be keenly awaiting updates on the company's financial performance and how the recent investment might impact its growth strategy moving forward.
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