Stone Point Poised To Reap Harvest Of Housing Downturn

Target: Real Estate Disposition Corp.

Price: Undisclosed

Sponsor: Stone Point Capital LLC

Seller: Real Estate Disposition Corp.

Stone Point Capital LLC, a Greenwich, Conn., middle-market shop that invests in the insurance and financial services industries, recently completed its acquisition of a 50 percent stake in Real Estate Disposition Corp., the largest real estate auction company in the United States.

It’s at least the second investment made by the firm to take advantage of the crumbling housing market. And judging by the latest foreclosure numbers, a hefty 25 percent jump for October activity from year-ago levels, both portfolio companies could prosper for some time to come.

Financial terms of the deal, which was made from Trident IV, weren’t disclosed. Trident IV closed in September 2007 with $2.25 billion in capital commitments. The investment in Real Estate Disposition Corp. is the seventh from that pool, whose limited partners include publicly-traded fund-of-funds manager Conversus Capital, according to Thomson Reuters data.

“In this period of turmoil in the mortgage sector, REDC is well positioned to help its clients manage the disposition of their real estate assets in an efficient auction format,” said Stephen Friedman, Stone Point Capital’s chairman, in a statement. Real Estate Disposition Corp., founded in 1990 and headquartered in Irvine, Calif., holds auction events throughout the country. It has more than 350 full-time employees.

Stone Point Capital has at least one other portfolio company that should thrive in the trouble housing downturn—Cyprexx Services LLC, an outsourcer of repair and inspection services for foreclosed residential properties. Other portfolio companies in the real estate market include ZC Sterling, a provider of hazard insurance products and real estate tax services; and Amherst Holdings, a provider of brokerage and research services related to residential mortgage-backed securities.

The investment in Amherst Holdings, completed in early October, is another recent deal. Stone Point Capital led a group that provided $225 million in capital to the company, whose principal unit is Amherst Securities Group, a specialist broker-dealer that’s been involved with mortgage-backed securities for more than 15 years.

At the time, Amherst Holdings said it would use the capital to provide market-making services for its clients and to add staff, among other purposes. Exact terms of the deal weren’t disclosed, and it’s unclear exactly what stake Stone Point Capital holds in the company.