U.S. Markets closed

AV Homes receives $135M investment from TPG

SCOTTSDALE, Ariz. (AP) -- AV Homes, which develops adult communities and other properties in Arizona and Florida, said Wednesday that private equity firm TPG is making a $135 million in investment in the company.

TPG is paying $14.65 per share, which is a slight premium to its Tuesday closing price of $14.54. The firm will own about 42 percent of AV Homes once the transaction closes.

Shares of AV Homes Inc. jumped $2.67, or 18.4 percent, to $17.21 in morning trading. Earlier in the session, the stock touched $17.25, its highest level in more than two years.

The announcement comes as the housing market continues to show signs of a sustained recovery. The Commerce Department reported Tuesday that the overall pace of homes started rose 6.8 percent in May to a seasonally adjusted annual rate of 914,000.

And on Monday the National Association of Home Builders/Wells Fargo builder sentiment index leapt to 52 in June from 44 in May — the biggest monthly rise since 2002. A reading above 50 indicates more builders view sales conditions as good, rather than poor. The index hasn't been that high since April 2006, just before the housing market collapsed.

AV Homes said that it will use the proceeds from the investment to speed up its plan to grow in existing and new housing markets.

AV Homes currently operates in the Phoenix, Arizona and Central and South Florida markets. Its Vitalia brand concentrates on the development of communities for people age 55 and over. Its Joseph Carl Homes brand serves the housing needs of first-time and move-up home buyers.

The company's board approved the TPG investment. Funding is expected to occur by Thursday.

Once the transaction closes, TPG will get two of AV Homes' eight board seats. It will get four of 10 seats when shareholder approval is obtained. The number of board seats TPG has could decline if its ownership percentage falls below a certain level that was not specified by AV Homes.