Quicken Loans and Rocket Mortgage owner Rocket Companies has filed for an initial public offering, with the mortgage provider owned by billionaire Dan Gilbert disclosing annual profits over the past three years.
The Detroit-based company, which describes itself as the largest U.S. retail mortgage lender, said it earned $97.7 million on revenue of $1.8 billion in the three months ended March 31, compared with a loss of $299 million on revenue of $727 million for the same period last year.
Rocket Companies' IPO intentions come as the U.S. IPO market shows signs of recovery following the coronavirus pandemic, which prompted the biggest percentage drop in stocks in history, though also spurred government officials to backstop the economy, spurring one of the quickest rebounds on record.
Indeed, the Federal Reserve’s efforts to keep markets functioning by buying mortgage securities hit mortgage lenders like Quicken Loans, which were forced to recalibrate their hedges against lender defaults which were being artificially propped up. The Fed has continued to buy mortgage-backed securities but has slowed the pace of its buying.
It also comes as homeowners struggle to maintain their mortgage payments, even with widespread mortgage relief programs in place. Some 11% of households with a mortgage failed to make their last payment and 16% said they fear they can’t cover the next one, according to the U.S. Census Bureau’s Household Pulse survey in the five weeks through June 2.
Gilbert will have 79% of the voting power of the company’s common stock, according to the filing. Gilbert is also the owner of the Cleveland Cavaliers, the National Basketball Association team whose arena bears the company’s name.
The offering is being led by Goldman Sachs Group, Morgan Stanley, Credit Suisse Group, JPMorgan Chase and Royal Bank of Canada. It plans to list its shares on the New York Stock Exchange under the symbol "RKT."