Fidelity Selling 25% Stake in Tech Unit to Thomas Lee.(Fidelity National Financial )

Jacksonville, Fla. -- Fidelity National Financial here has agreed to sell a 25% stake in its mortgage and banking technology business to buy-out king Thomas H. Lee Partners LP, and other firm, Texas Pacific Group, for $500 million.

Fidelity National Information Services (known internally as FIS), a subsidiary of the title insurance giant, owns the Empower loan origination software brand which five of the top 25 lenders use.

The unit also includes the nation's largest servicing platform, the former Alltel Information Services which manages 25 million loans. This past fall FNF had hoped to spin-off FIS into a separate, publicly-traded company but thought it could unleash more of the unit's value through a recapitalization plan and selling a large stake to THLP/TPG.

"This is an opportunity for Bill (Foley) to get value," said FIS mortgage president Hugh Harris about the recapitalization. "The plan now is to keep it as a division of FNF." Even with the recap and the sale to THLP/TPG, William Foley, chairman and chief executive of FNF, said that a spin-off, down the road, is still a possibility.

THLP/TPG is getting a 25% stake in FIS, a business that includes Mr. Harris' group, but also "real estate related services," a division headed by Ernie Smith. FIS has total annual revenues of about $3 billion.

"We ...