The Firm Has No Immediate Plans to Tap the Shelf Registration
One of the largest title insurance companies in the nation, Fidelity National Financial Inc., has filed to offer $500 million of debt securities, common and preferred stock and depository shares.
Its plans for the money: Nothing.
At least not yet.
“It gives us the flexibility to do what we need to do. You want to be prepared when an opportunity comes along,” said Daniel Murphy, Fidelity’s director of investor relations.
Fidelity needed to replenish its supply of shelf instruments, Murphy said, because in January it used its securities to pay off some debts.
Fidelity closed a public offering of 7 million shares of common stock priced at $33.50 in January, including an over-allotment. The proceeds of the offering,$256.2 million,were used to repay both a $100 million, 18-month revolving credit facility due in September and $149.5 million of debt through a $250 million, six-year, revolving credit facility due in five years.
“Having just done the equity offering in January, it made sense to replenish ourselves,” Murphy said. “It is just doing some groundwork for the future. There is nothing planned. But if our future is anything like our past, I am not surprised if we do something.”
A year ago, the company merged with Chicago Title, then the No. 3 title insurance firm nationally, and has been integrating operations since. Fidelity now is planning to grow its market share, Murphy said.
“Last year our focus was on the integration, now the focus is on the competition,” he said.
Fidelity is planning to grow its operations internally to increase its revenue and shareholder value, but it still has its eye open for acquisitions, according to Murphy.
In fact, it already has returned to the M & A; arena. In January, Fidelity acquired International Data Management Corp., a Los Angeles-based company that gathers demographic information such as data on properties, school districts, crime rates, freeways and environmental hazards for use by real estate brokers.
“There is a big demand for it,” Murphy said.
Fidelity is also in the process of forming a real estate services company in partnership with Vista Information Solutions Inc., to combine both companies’ real estate information and technology products.
“They bring some things we don’t already have,” Murphy said.
So far, only a letter of intent binds the two companies, but Murphy said they expect to sign a definitive agreement in the next month.
“It’s a way we are more involved in the real estate transaction, to maximize the value of our place in that transaction. We want ourselves completely entwined in the transaction from beginning to end,” Murphy said.
Title insurance companies have been expanding their product lines by adding information services for the real estate industry. First American Corp., Santa Ana, the nation’s other major title insurance company, has been expanding and broadening its array of services through acquisitions for the past two to three years; it changed its name last year from First American Title Corp. to reflect its new diversity. n
