Thursday, Velocity Financial, Inc. (VEL) announced an agreement to acquire the operating platform of Toorak Capital LLC, which is majority-owned by funds advised by affiliates of KKR.

Toorak has separately agreed to sell its existing portfolio of business-purpose loans, totaling approximately $3 billion in unpaid principal balance across whole loans and loans held in Toorak Mortgage Trust and TRK Trust securitizations, to a third-party investment firm.

In connection with the transaction closing, Velocity will enter into an agreement with the third-party investment firm to manage the portfolio acquired from Toorak. Velocity will also establish agreements to sell future Toorak loan production to the third-party investment firm and other counterparties.

Velocity expects the transactions to be accretive to earnings in 2027 and to generate an attractive return on equity.

Following the completion of the transactions, Toorak will maintain its existing brands across its respective lending segments, including the Merchants brand. Founder and Chief Executive Officer John Beacham will become an Executive Vice President of Velocity Commercial Capital, LLC, and Toorak will become a subsidiary of Velocity Commercial Capital.

Velocity is purchasing Toorak's operating platform as a 100% cash transaction. The company expects the acquisition to close in the fourth quarter of 2026.

VEL was trading at $17.80, up 0.79 percent before the bell on the NYSE.

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