Key facts
- Velocity Financial is acquiring Toorak Capital's operating platform for an undisclosed all-cash sum.
- Toorak Capital is selling a $3 billion portfolio of business-purpose loans to an unnamed investment firm.
- Velocity will manage the acquired loan portfolio and enter into forward sale agreements for future originations.
- The combined value of the transactions is approximately $3.2 billion.
- The deal is expected to increase Velocity's origination volume by 76% and its servicing portfolio by 39%.
- Toorak's founder and CEO, John Beacham, will continue to lead Toorak and take on an executive role at Velocity.
Velocity Financial Inc. has announced its intention to acquire the operating platform of Toorak Capital LLC and manage a $3 billion portfolio of business-purpose loans (BPLs). The combined transactions are valued at approximately $3.2 billion.
Under the agreement, Velocity will purchase Toorak's business-purpose lending and asset management platform in an all-cash deal. Concurrently, Toorak will sell about $3 billion in unpaid principal balance of whole loans and securitized loans to an unspecified third-party investment firm. Velocity will then enter into an agreement with this investment firm to manage the acquired portfolio and establish forward sale arrangements for future loan originations.
Velocity aims to transition towards a capital-light, fee-based model focused on origination, servicing, and asset management, rather than balance-sheet loan growth. The company anticipates the acquisition will boost its origination volume by approximately 76% and its servicing portfolio by about 39%. The deal will also enhance Velocity's residential transition loan (RTL) and debt-service-coverage ratio (DSCR) product offerings, introduce a direct retail origination channel, and expand its presence into the United Kingdom.
Toorak Capital, founded in 2016 with backing from KKR, provides capital to residential real estate investors and has funded over $20 billion in loans since its inception. Following the acquisition, Toorak will retain its existing brands and headquarters, with founder and CEO John Beacham continuing to lead the company and also assuming an executive vice president role at Velocity Commercial Capital LLC. Toorak will operate as a subsidiary of Velocity Commercial Capital, with its operations integrated into Velocity's financial statements.
Barclays Capital Inc. served as the exclusive financial adviser to Velocity, while Piper Sandler & Co. advised Toorak and KKR. The transactions are subject to customary closing conditions and regulatory approvals, with an expected closing in the fourth quarter of 2026.