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Aug. 5, 2020, 10:23 p.m. EDT

Quicken Loans is going public: 5 things to know about the mortgage lender

Quicken has been the largest mortgage lender in the U.S. since 2018

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By Jacob Passy


Quicken Loans
Since debuting Rocket Mortgage in 2016, which allows consumers to apply for a mortgage online or through a mobile app, Quicken Loans has grown to become the largest mortgage lender in the country.

Rocket Companies /zigman2/quotes/219854810/composite RKT +9.89% , the parent company of mortgage lending giant Quicken Loans, has set the terms of its initial public offering.

The company announced Wednesday night that it plans to sell 100 million shares at $18 each — both below initial estimates. In July, the company said it planned to offer 150 million shares priced at $20 to $22 each. It plans to begin trading on the on the New York Stock Exchange under the ticker “RKT” starting Thursday.

Twenty banks are set to underwrite the IPO, led by Goldman Sachs /zigman2/quotes/209237603/composite GS +0.19%

Proceeds from the IPO will be used to purchase businesses and Class D stock from Rocket Cos.’ existing holding company, Rock Holdings Inc., which is owned by the company’s founder and chairman Dan Gilbert.

Rocket’s IPO comes as the broader IPO market has kicked into high gear after a long dry spell as a result of the coronavirus pandemic. Recent offerings include Warner Music Group Corp. /zigman2/quotes/218669580/composite WMG -0.17% , which returned to public markets in June after nine years of being private, and online insurer Lemonade /zigman2/quotes/219257798/composite LMND +3.94% , which debuted last week.

Rocket is also going public as the mortgage industry has seen millions of homeowners request forbearance on their monthly loan payments amid record levels of unemployment.

The company’s leadership team mainly comprises executives from Quicken Loans. Jay Farner, who has served as CEO of Quicken Loans since 2017, will be the company’s CEO. Farner has been with Quicken for over two decades, and previously served as the lender’s president and chief marketing officer. Julie Booth, the company’s chief financial officer and treasurer, has been in this role at Quicken Loans since 2005.

The lender was originally founded in 1985 as Rock Financial. In 1998, Gilbert took Rock Financial public, but eight years later it was purchased by Intuit. At that time, the company’s name was switched to Quicken Loans. Then in 2002, Gilbert and other investors purchased Quicken Loans back from Intuit /zigman2/quotes/203136605/composite INTU -0.62% .

Don’t miss: The mortgage industry is facing a crisis because of the coronavirus — and borrowers could fall through the cracks

Throughout its history, Quicken has been at the forefront of the digitization of the mortgage industry. In 2016, Quicken Loans debuted the Rocket Mortgage brand with the claim that the company’s digital mortgage process could connect consumers with a mortgage in as little as eight minutes.

Rocket Mortgage has increased its market share to 9.2% in the first quarter of 2020 from 1.3% in 2009. Rocket Mortgage’s primarily digital mortgage lending process has proven popular with millennials in particular, who represent the largest generation of home buyers in the country. Among the consumers who applied for a home loan using the company’s online platform or app, 75% were first-time homeowners or millennials, the company said.

In 2018, Quicken Loans became the largest mortgage lender by volume in the U.S. by supplanting Wells Fargo /zigman2/quotes/203790192/composite WFC +0.02% , in a demonstration of the growing dominance of non-bank lenders in the mortgage space.

Rocket Cos. also owns a range of companies across the financial services and real-estate ecosystems, include real-estate listing websites Rocket Homes, title insurance company Amrock and financial product search engine LowerMyBills.

Those other businesses could comprise a broader part of the company’s strategy moving forward. Earlier this year, the company’s CEO, Jay Farner, described to MarketWatch how Quicken Loans was aiming to develop new products and services designed to give homeowners a more comprehensive view into their assets.

“Your largest investment is your home, so why not more visibility into how that asset’s forming and more suggestions to improve that?” Farner said. “You’re going to see people bring more value to consumers that way. That’s what we’re focused on.”

According to its IPO prospectus , the company has seen its net revenue double over the past year. The company brought in nearly $1.4 billion in the first three months of 2020, as compared with $632 million during the same period last year. The company’s net income in the first quarter of 2020 was $97.7 million, after a net loss of $299 million a year ago.

Here are five things to know about Rocket ahead of its IPO:

/zigman2/quotes/219854810/composite
US : U.S.: NYSE
$ 19.78
+1.78 +9.89%
Volume: 36.46M
Aug. 6, 2020 11:49a
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
N/A
Rev. per Employee
N/A
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/zigman2/quotes/209237603/composite
US : U.S.: NYSE
$ 204.90
+0.38 +0.19%
Volume: 737,203
Aug. 6, 2020 11:48a
P/E Ratio
10.88
Dividend Yield
2.44%
Market Cap
$70.33 billion
Rev. per Employee
$1.34M
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/zigman2/quotes/218669580/composite
US : U.S.: Nasdaq
$ 28.59
-0.05 -0.17%
Volume: 106,190
Aug. 6, 2020 11:46a
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$14.61 billion
Rev. per Employee
N/A
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/zigman2/quotes/219257798/composite
US : U.S.: NYSE
$ 67.02
+2.54 +3.94%
Volume: 737,874
Aug. 6, 2020 11:49a
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$3.54 billion
Rev. per Employee
N/A
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/zigman2/quotes/203136605/composite
US : U.S.: Nasdaq
$ 309.02
-1.93 -0.62%
Volume: 169,183
Aug. 6, 2020 11:48a
P/E Ratio
61.03
Dividend Yield
0.69%
Market Cap
$81.09 billion
Rev. per Employee
$722,584
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/zigman2/quotes/203790192/composite
US : U.S.: NYSE
$ 24.31
+0.0050 +0.02%
Volume: 14.55M
Aug. 6, 2020 11:49a
P/E Ratio
27.81
Dividend Yield
1.64%
Market Cap
$100.53 billion
Rev. per Employee
$392,114
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