Black Knight Financial Services spin-off from Fidelity National (FNF)
Price: $43.45 P/E FY1: 31.6 No Dividend
Fidelity National (FNF) will spin-off Black Night Financial (BKFS) at the market’s close today 9/29/17. FNF owns 55% of BKFS and FNF shareholders will receive 0.3 shares of BKFS. Starting on 10/2 BFKS will change their name to Black Knight, Inc. and the ticker to BKI.
BKFS provides integrated technology, workflow automation and data analytics to mortgage issuers. They provide servicing solutions to over 60% of the top 100 banks and 60% of all first liens are processed by BKFS. Outsourcing of mortgage operations has been driven by regulations in response to 2008/09 financial crisis.
Revenue model is highly recurring with an estimated 80% of revenues recurring under long-term contracts with built in price increases. Revenue growth is estimated from 6% to 8%. Sales pipeline is robust with BAC and C as new customers.
We recommend holding shares of BKFS/BKI and will continue to research Black Knight as a potential addition to the technology sector, giving us exposure to a stable fintech company.