Dealmaking

Quicken Loans parent Rocket Companies aims to raise up to $3.3 billion in IPO

Company reports originations surged by 40% in the second quarter

This article was originally published by HousingWire, an HW Media publication dedicated to serving mortgage and real estate professionals.

Rocket Companies, the parent company of Quicken Loans, revealed this morning additional details of its initial public offering.

According to its S-1A filed with the U.S. Securities and Exchange Commission, Rocket plans to offer 150 million shares of its common stock at a price of $20 to $22 per share. That means the company aims to raise between $3 billion and $3.3 billion in its IPO.

Rocket Companies is actually registering a total of 172.5 million shares, including 22.5 million shares that underwriters have the option to purchase.

The IPO is expected to price on August 5, according to sources, although a Rocket spokesperson said the company had not yet announced when it would price or start trading.

On July 7, we reported on the nation’s largest online mortgage lender dropping its S-1.

Founded in 1985, Quicken Loans has seen record numbers of refinance and purchase applications in recent months, in the midst of the COVID-19 pandemic.

The corporate structure of Rocket Companies will be sophisticated. Notably, Dan Gilbert will retain significant control, with approximately 79% of the combined voting power in the public entity.

Gilbert claims to have pioneered the digitization of mortgages in America in 1998, when he penned an email calling out the opportunity that the internet presented to consumers and lenders alike.

In its S-1A, Rocket also revealed its preliminary financial results for the second quarter of 2020, which it noted are not complete and will not be available until after the completion of its offering.

For the second quarter of 2020, based on preliminary results, Rocket estimated that its total revenue, net, was between $4.93 billion and $5.13 billion and net income was between $3.35 billion and $3.55 billion.

Over the same time period, adjusted revenue was between $5.20 billion and $5.42 billion, adjusted net income was between $2.76 billion and $2.93 billion, and adjusted EBITDA was between $3.71 billion and $3.95 billion.

Rocket had $72.3 billion in originations for the second quarter of 2020, an increase of about 40% from originations of $51.7 billion in the first quarter of 2020. Its market share grew by 30% to 8.7% for the six months ended June 30, 2020, from 6.7% for the same period in 2019. 

Additionally, during the second quarter of 2020, it says it had $92 billion of net rate lock volume, an increase of approximately 64% from net rate lock volume of $56.1 billion in the first quarter of 2020. 

The company said it also organically grew its servicing portfolio by 10% to $378.2 billion and 1.93 million client loans as of June 30, 2020, from $343.6 billion and 1.83 million client loans as of March 31, 2020.

Other interesting tidbits in today’s S-1A include:

  • Rocket says it has invested over $5 billion in marketing since its inception, with nearly one-fifth, or $905 million, of that being spent in 2019 alone. 
  • The company has about 20,000 employees.
  • In 2019, the company had overall client retention levels of 63% and refinancing retention levels of 76%, which it says is approximately 3.5 times higher than the industry average of 22%

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