Rocket Cos., Quicken Loans Parent, Files IPO

Rocket Companies, one of the nation’s largest mortgage lenders and parent of Quicken Loans, filed its initial public offering (IPO) late Tuesday (July 7).

In its application with the U.S. Securities and Exchange Commission, the Detroit-based parent of Quicken Loans and Rocket Mortgage will go public under the name Rocket Companies. But founder and chairman Dan Gilbert will remain in control, Bloomberg News reported.

The application did not provide pricing per share or a date when shares will go on sale. If approved by the SEC, Rocket Cos.’ stock symbol would be “RKT.” Quicken has a workforce of 20,000.

Last month, PYMNTS reported the company has filed its initial IPO prospectus in secret and noted it could be one of the largest IPOs filed in 2020.

The target valuation hasn’t been decided, but it could be in the tens of billions of dollars, and Quicken Loans is working with Morgan Stanley, Goldman Sachs, Credit Suisse and JPMorgan on managing the deal.

David Kudla, CEO of Mainstay Capital Management, told the Detroit Free Press that said the SEC filing indicates that Gilbert will essentially have full control of the company through 79 percent of the combined voting power of the common stock.

“The deal is being constructed so Dan Gilbert maintains a ‘super majority position,’” he said, noting a super majority is generally classified as 67 percent to 90 percent ownership. “Essentially, Dan Gilbert is maintaining full control of the company.”

In the SEC paperwork, key financial details about Gilbert’s businesses were revealed for the first time, the Free Press reported.

Rocket Companies had $5.1 billion in total revenue and $894 million in net revenue in 2019, the newspaper reported.

During the first quarter, the company had $97 million in net income, compared with a net loss of $299 million for the same three months in 2019.

At the close of May, the company had $2.6 billion in cash and $1.2 billion in undrawn lines of credit, the Free Press reported.

Most of its business has involved refinancing, according to the filing, as mortgage rates hit historic lows, and 27 percent of its mortgage origination volume last year was home purchases.

“Historically, our originations have been more heavily refinancings than the overall origination market,” the filing said.