Some very big news in the mortgage world – Quicken Loans is reportedly going public, with an IPO currently being worked on by Credit Suisse, Goldman Sachs, JPMorgan, and Morgan Stanley.
It’s now confirmed. Quicken has officially filed its IPO, under the name “Rocket Companies Inc.” It will trade under the symbol RKT on the New York Stock Exchange.
Rocket Companies Inc. consists of many consumer brands, including Rocket Mortgage, Rocket Homes, Rocket Loans, Rocket Auto, Rock Central, Core Digital Media, Rock Connections, Lendesk and Edison Financial.
It doesn’t appear that the Cleveland Cavaliers basketball team or Rocket Mortgage FieldHouse are part of the deal, but that’s unclear.
The size of the deal and number of shares have not been disclosed and it’s subject to market conditions, which we all know are questionable at the moment.
It is being led by Morgan Stanley, Credit Suisse, JP Morgan, Goldman Sachs, and others.
The Detroit-based company, which recently became the bona fide largest mortgage lender in the nation across all channels, has been private since 2002.
There was a period of time when the lender was publicly-traded before eventually being sold to TurboTax and QuickBooks maker Intuit in 1999.
A few years later, founder Dan Gilbert bought Quicken Loans back from Intuit and took it private again.
Fast forward to 2020 and it appears they’re ready to test the market on Wall Street once again, this time being the #1 mortgage lender in the country.
The story resembles the path Countrywide Financial took, back when it was the largest lender in the country in the early 2000s.
It didn’t end so well for Countrywide, with Bank of America reluctantly agreeing to buy them out after its share price crumbled during the Great Recession.
Why Does Quicken Loans Want to Go Public Now?
- Officially became the largest mortgage lender in Q1 2020 with $51.7B funded
- Originated $21 billion in home loans in March, its biggest quarter in history
- Its estimated nearly $75B in mortgage applications during second quarter
- So the company is expected to hit new records and potentially take #1 spot over a full year
Well, for starters, they’re absolutely crushing it. They already displaced former #1 Wells Fargo in the first quarter after funding nearly $52 billion versus the former’s $48 billion.
That included a record month in March where they originated $21 billion in home loans, thanks in part to their massive sister brand Rocket Mortgage, which is arguably their main brand.
CEO Jay Farner made it clear that was just the tip of the iceberg, with nearly $75 billion in mortgage applications estimated for the second quarter.
That could be enough to dethrone Wells Fargo over a full year, something the company has never achieved.
Back in the fourth quarter, they beat Wells Fargo on the retail end of things, but still fell short thanks to the San Francisco-based bank’s massive correspondent lending business.
Now they’re beating Wells across all lending channels, while growing their wholesale channel that partners with mortgage brokers.
The long-lasting low mortgage rate environment has also been a huge boon to their success, allowing them to consistently grow their origination volume as millions of Americans refinance their mortgages.
So it sounds like the perfect time to go public, assuming you ignore all the serious stuff going on at the moment.
Not that any of it has seemed to matter with the stock market showing signs of a V-shaped recovery.
Regardless, Quicken Loans might see it as a good time to cash in on all their years of success and reward those who have helped them get there.
How Much is Quicken Loans Worth?
- It depends how profitable the company is and what’s included
- Rock Ventures apparently generated revenue of $6.56 billion in 2017
- Targeted valuation in the tens of billions, could be largest IPO of 2020
- Reportedly already filed its IPO prospectus confidentially
The billion-dollar question here is what is Quicken Loans worth? And also what’s being packaged in the IPO.
Quicken Loans actually has a parent company known as Rock Ventures LLC, which covers Quicken Loans founder and Cleveland Cavaliers chairman Dan Gilbert’s portfolio of more than 100 companies.
Per Crain’s, Rock Ventures was already generating revenue of nearly $7 billion annually back in 2017. I assume it only jumped since then.
Does the IPO include the Cleveland Cavaliers and the Rocket Mortgage FieldHouse? Or the other Detroit real estate? Or the website Benzinga, or One Reverse Mortgage?
That’s unclear, either way, billions sounds about right. And it’ll be really interesting to finally get an inside view of their numbers, profitability, and so on.
It’ll also be nice to have that level of transparency assuming they’re going to be the nation’s largest home loan lender from here on out.