Trump Administration Eyes $30 Billion IPO Of Fannie Mae, Freddie Mac: Report
Synopsis
According to The Wall Street Journal report, officials are considering a combined valuation of over $500 billion and could sell between 5% and 15% of the companies’ stock.
The Trump administration is reportedly preparing to sell shares in mortgage giants Fannie Mae (FNMA) and Freddie Mac (FMCC), eyeing to raise up to $30 billion later this year.
People familiar with the matter told The Wall Street Journal that officials are considering a combined valuation of over $500 billion and could sell between 5% and 15% of the companies’ stock. The report added that whether the government will proceed with a joint IPO or list the firms separately is still under discussion.
Freddie Mac’s stock, listed on the OTC market, gained more than 20% in midday trade on Friday, with retail sentiment on Stocktwits in ‘bullish’ territory. The shares have more than doubled in value this year and gained more than 600% over the past 12 months.
Meanwhile, Fannie Mae's stock gained nearly 18%, with its retail sentiment also in the 'bullish' zone. The shares have gained 183% this year and almost 780% over the past 12 months.
Fannie Mae and Freddie Mac have been under federal conservatorship since the 2008 financial crash. Both companies had become insolvent during the subprime mortgage crisis. Earlier attempts to exit conservatorship were also made during Trump’s first term.
Since being bailed out, the companies have rebuilt capital reserves, repaid their Treasury loans, and returned to profitability. However, Freddie Mac’s most recent second-quarter (Q2) results showed a 14% dip in net income year-over-year (YoY).
The news of a $500 billion valuation comes after Reuters reported earlier this week that the President had met with the CEOs of Citigroup (C) and Bank of America (BAC) to discuss the administration’s plans for privatization. Trump also reportedly met with other banking executives, including Goldman Sachs’ (GS) CEO David Solomon, in late July to discuss the same.
Read also: Trump Warns Ending Tariffs Now Would Trigger A ‘Great Depression’
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