Mortgage lenders going public in 2020: a timeline

December 31, 2020 9:00 AM

As some parts of the U.S. economy faced their darkest days, several nonbank lenders decided 2020 was the year to go public. It was the first time in more than a decade that lenders sought to take advantage of investor interest in the sector, which is having one of the best, if not the best, year for mortgage originations ever.

National Mortgage News takes a look back at the companies that considered going public or did so during the year, either through an initial public offering or merging with a special-purpose acquisition company.

July 7: Quicken Loans files to go public

Detroit-based Rocket Cos., which owns Rocket Mortgage and Quicken Loans, filed for an initial public offering valued at $100 million, a placeholder amount. In a late July filing with the U.S. Securities and Exchange Commission, the company stated it planned to offer $150 million shares for $20 to $22 each.

By the third quarter, the U.S. IPO market had bounced back after a slump brought on by the coronavirus pandemic. A combined total of $134 billion was raised in the second quarter, the busiest quarter on record.

(Read full story here.)

Aug. 5: Rocket downsizes IPO, aiming to raise $1.8B

Rocket Cos. priced the shares in its shrunken initial public offering at $1.8 billion, compared with the $3.3 billion offering the Detroit-based company had shot for earlier.

Rocket sold 100 million shares for $18 each, according to a statement. Rocket had earlier filed to sell 150 million shares at $20 to $22 each.

(Read full story here.)

Aug. 6: Rocket's IPO lifts off, with first close up $3.51 per share

Rocket Cos. initial public offering recovered from some pre-opening jitters ending Aug. 6 up $3.51 per share from its starting price of $18 per share. The closing price of $21.51 was in the expected range of between $20 and $22 per share; the offering was also downsized to 100 million shares from 150 million.

"A $36 billion [corporate] valuation was still pretty special and then to see it trade up today has been pretty heartening," said Bob Walters, Rocket's president and chief operating officer.

(Read full story here.)

Sept. 17: LoanDepot considers IPO at up to $15B valuation

LoanDepot took steps toward rebooting plans for an initial public offering in September, about five years after scrapping one at the last minute.

The company, which could be worth $12 billion to $15 billion, according to an anonymous insider, has held discussions with potential underwriters for an IPO. The tipster said at the time that an IPO could come as soon as soon as the fourth quarter.

"We continue to evaluate capital options and are excited about our industry position," Chief Executive Officer Anthony Hsieh said.

(Read full story here.)

Sept. 23: UWM head discusses decision to go public via SPAC

By going public through a merger with Gores Holdings IV, United Wholesale Mortgage leadership hoped to get onto a level playing field with its competition, President and CEO Mat Ishbia said.

"Our company for so many years has been growing at this rapid pace," he said during an investor call on the deal. "However, now we believe that the extra resources, the opportunity to basically put us on a level playing field with a lot of our competition will take us to a whole nother level."

UWM's merger with the SPAC valued the mortgage lender at $16.1 billion. At the time, the deal was expected to close in the fourth quarter.

However, on Dec. 18, the company announced that it would go public on Jan. 22, 2021.

(Read full story here.)

Oct. 13: Finance of America announces it will go public via SPAC

Only a few weeks later, Finance of America Equity Capital announced its intention to go public by merging with special-purpose acquisition company, Replay Acquisition Corp. Among Finance of America's investors is Blackstone Group, which, along with FOA's management, planned to retain 70% of the company after the merger was completed.

"Becoming a public company is an important milestone for Finance of America and provides further access to capital via the public markets over time," said CEO Patricia Cook.

(Read full story here.)

Oct. 15: Guild Mortgage files for its own IPO

Guild Mortgage filed for an initial public offering just days later, expecting the deal will price between $17 per share and $19 per share.

Guild planned to offer 8.5 million Class A shares with an additional 1.275 million shares that could be sold as part of the underwriters' option. At the midpoint of the price range, with the additional shares included, Guild would raise approximately $176 million.

(Read full story here.)

Oct. 22: Guild stock begins trading, prices under expected range

Guild Holdings downsized its initial offering to bring in $64 million less than expected if all the shares, including the underwriters' option, were sold. Guild did not comment on why the offering size was reduced. It was trading below the $15-per-share price after launch on Oct. 22.

The deal included 6.5 million shares, plus an underwriters' option of an additional 975,000 shares. If the option was exercised, the proceeds would total $112.1 million.

(Read full story here.)

Oct. 22: Finance of America leadership explains why it was not initially looking to go public via SPAC

Although merging with a special-purpose acquisition company became the hot way to go public in 2020, doing this kind of transaction was not on the minds of the management team at Finance of America as they looked to go public at the start of 2020.

"We were set to go the IPO route," said CEO Patricia Cook. "The reason we pivoted wasn't about the SPAC. It's all about our particular sponsors. Between Edmond Safra, Chinh Chu and Lance West, we have some of the best investors in the business."

"It's not the SPAC structure particularly, but it was all about those three partners," Cook said.

The pandemic did not play into Finance of America's timeline for going public, but it did allow the company to show potential investors the strength of its business model.

(Read full story here.)

Oct. 23: Guild Mortgage leadership discusses why they downsized the IPO

While its first days on the stock market were up and down, Guild Mortgage's IPO will ultimately position the 60-year-old San Diego-based nonbank lender for the next phase of its growth, said CEO Mary Ann McGarry.

"It gives us more accessibility to different sources of capital when and if we need it," McGarry said. "We don't need it right now, but if there's an opportunity to grow and we need funds, it's a good source."

Regarding the decision to downsize the offering, McGarry and Guild President Terry Schmidt pointed to some recent volatility in nonbank mortgage stocks, noting that while Guild was marketing the IPO, prices for these companies, including Rocket Cos., dropped by around 10%. Thus the selling shareholders elected to retain more shares than planned.

(Read full story here.)

Oct. 29: AmeriHome joins Caliber in delaying IPO

A pair of home loan originators backed away from initial public offerings as market volatility increased ahead of the election.

Both Caliber Home Loans Inc. and AmeriHome Inc. were scheduled to price their offerings on Oct. 28 after the market closed. Both shelved the plan indefinitely.

Caliber's shareholders were planned to sell 23 million shares for $14 to $16 each to raise as much as $368 million. AmeriHome had filed to sell 14.7 million shares for $16 to $18 apiece, which would have raised up to $265 million.

(Read full story here.)

Nov. 11: LoanDepot confirms it's considering an IPO again

LD Holding Group, through its new loanDepot Inc. affiliate, submitted a draft registration statement with the Securities and Exchange Commission for a possible initial public offering.

The number of loanDepot shares to be sold and their price range have not yet been determined, the company said in its press release. Sources close to the matter had valued the company at $12 billion to $15 billion in an IPO, according to a September report from Bloomberg.

LoanDepot, which is led by founder and CEO Anthony Hsieh, previously considered going public in 2015, but never followed through due to what it saw as unfavorable market conditions at the time. Hsieh headed a series of online mortgage companies prior to the Great Recession and founded LoanDepot in 2010.

(Read full story here.)

Nov. 13: Better.com raises $200M, leading to IPO speculation

Better.com could be the next mortgage company to join the herd of lenders going public. The company closed $200 million in Series D fundraising in mid-November.

L Catterton, a private equity investor headquartered in Greenwich, Conn., led the round, alongside Activant Capital, Ally Financial, American Express Ventures, Ping An Global Voyager Fund and 9Yards Capital. The cash infusion comes 15 months after Better raised $160 million in its Series C round from August 2019. All told, Better compiled $454 million in funds starting in 2016.

Speculation abounds as to whether Better's latest capital raise signals an imminent IPO. However, no official filing has been made at this time and the company declined to comment on that possibility.

(Read full story here)

Nov. 20: New Residential announces IPO for NewRez unit

New Residential Investment confidentially filed a draft registration statement with the Securities and Exchange Commission on its intention to spin off its NewRez subsidiary in an initial public offering, the company announced.

"Management had discussed this possibility on its third quarter earnings call so this filing is not a surprise," Bose George, an analyst with Keefe, Bruyette & Woods, said in a note on the move. "At that time, the company also noted that an IPO could be a positive for New Residential's valuation since a mortgage bank could trade at a premium to book value."

(Read full story here.)