Compass raises US$850m for Anywhere
Compass added to the positive newsflow of late by raising an upsized US$850m on Wednesday from the sale of a five-year convertible bond to fund its merger with Anywhere Real Estate.
Morgan Stanley and JP Morgan were joint lead bookrunners on the pricing of the CB at a 0.25% coupon and 35% conversion premium, through the aggressive ends of 0.5%–1% and 30%–35% talk marketed for one day. Given the strength of investor demand, the banks were able to increase the offering from the US$750m base deal targeted at launch.
“The momentum we saw late last year has carried over into 2026,” a banker involved told IFR. “This financing is a good example of where the convert market can be utilised to fund growth and acquisitions.”
The real estate brokerage is using the proceeds to take out a US$750m bridge loan put in place to backstop its merger with Anywhere Real Estate. While the US$4.5bn merger was all stock, Compass committed to reduce leverage to 1.5 times Ebitda by the end of 2028 from 4.4 times post merger.
The companies’ shareholders approved the merger on Wednesday, simultaneous with the CB launch and following the expiration of regulatory review processes a week earlier. The transaction was expected to close on Friday.
Compass’ shares rose 9.3% on Wednesday while the CB was being marketed and another 3.6% on Thursday after pricing to US$12.26, their highest level since 2021. The new CB ended on Thursday at 106.
Underscoring management’s conviction, Compass spent a portion of the CB proceeds on an equity derivative to offset dilution up to a share price of US$23.68, double the reference price.