HomeEquity Bank (“HEB”) originates and administers Canada’s largest portfolio of reverse mortgages to homeowners aged 55 and over.
Birch Hill identified HEB as an attractive go-private opportunity due to its strong underlying unit economics, large underpenetrated market and the strong value proposition of the product for customers. Birch Hill recognized the opportunity to reinvest capital in an accelerated growth plan that would also drive up HEB’s return on equity.
In November 2012, Birch Hill along with co-investors, reached an agreement to take HomeEquity Bank private. Through Birch Hill’s ownership, our investment and data science teams worked closely with management on several key projects including: reinvesting in the marketing and sales team; creating new BI tools to track and drive performance; optimizing sales regions; building a predictive tool to better anticipate origination levels; and developing a home price analysis tool to improve underwriting standards.
ROI – During Birch Hill’s nine-year ownership, HEB achieved compound annual growth of 23% in both net income and book value of equity while increasing ROE from 8% to 20%. Birch Hill and our co-investors exited in 2022.