Investors Put 32% of Sherman Financial Up for Sale

Radian Group and MGIC Investment Corp. are moving forward with their plans to sell nearly a third of Sherman Financial Group that could be worth as much as $520 million, despite the failure of the consolidation of MGIC and Radian.

The two each hold about 41 percent of the company for a total of an 82 percent share, Michael Zimmerman, MGIC’s vice president of investor relations, told insideARM.com. The two are working together with each seeking to sell 16 percent of Sherman, the largest debt purchaser and accounts receivables management firm in the country. Sherman didn’t return calls for comment.

“We are working in concert” to sell the shares, said Zimmerman who declined to share any details on potential buyers or terms of the deal.

However, Bob Quint, Radian’s CFO and executive vice president, told analysts and investors yesterday in a conference call that Radian could garner as much as $260 million for the sale of its 16 percent stake.

Quint said the sale “is well underway” and that Radian would still hold “between 20 percent and 25 percent” of Sherman after the sale.

Charleston, S.C.-based Sherman generated revenues of $1.05 billion in 2006, according to MGIC’s 2006 annual report filing with the U.S. Securities and Exchange Commission. Sherman contributed nearly $122 million to MGIC’s pretax income last year, said Zimmerman.

MGIC, a Milwaukee-based mortgage insurer, announced in February it would pay about $5 billion to buy Radian, a provider of credit risk management based in Philadelphia. The deal came apart as the subprime mortgage market fell into disarray this year. The primary cause was the implosion of C-BASS, a joint venture of Radian and MGIC that invested in securities backed by subprime mortgage loans.

Yesterday, Radian and MGIC officially announced their deal was off. In an April filing with the SEC, MGIC reported it and Radian planned to sell off some of their Sherman holdings if the deal went through but didn’t provide specifics.