Quicken Loans IPO Would Highly Value Detroit Company – If It Happens
An initial public offering of Quicken Loans Inc., the largest mortgage lender in the United States, could value the Detroit-based company in the tens of billions of dollars, according to experts and a published report – if the company continues the transaction. .
The possibility comes just a year after billionaire Dan Gilbert, founder and owner of the company, was hospitalized with a stroke. The private company could go public as early as next month, according to a CNBC report citing sources, and possibly one of the biggest IPOs so far this year.
The company “is constantly looking for new ways to invest and grow our business, while making a meaningful contribution to our home communities,” said a representative for Quicken and its Rocket Mortgage brand in a statement.
“Given our continued growth, market leadership and strong financial performance, we are frequently the target of rumors and speculation. If, and when, there is news to report, it will come directly from us. The News could not independently confirm CNBC’s report.
The mortgage lender has reportedly filed a prospectus confidentially, CNBC said, and may release it as early as next month. The assessment remains undecided, but could rank among the richest in the country so far.
Gilbert, 58, needed rehabilitation following an ischemic stroke in May 2019. The news shocked business and political leaders at Metro Detroit, a group that had become accustomed to the acquisition and the Gilbert’s aggressive rehabilitation of iconic downtown properties.
“When you have a stroke, here’s the problem: Everything is difficult. Everything,” Gilbert said. Crain’s Business in Detroit in February. “As you wake up, getting out of bed is difficult, going to the bathroom is difficult, sitting at a table is difficult. You name it. You don’t get a break. You are like trapped in your own body.”
Quicken closed $ 145 billion in loans Last year. It also posted a record lending volume of $ 52 billion in the first quarter, and results were solidly expected in April and May, despite a sharp economic slowdown spurred by the novel coronavirus pandemic, executives. told the Detroit News last month.
For a capital-intensive industry like mortgages, a public offering can be very profitable for shareholders and allow a company like Quicken to grow its business more broadly than in the past, said Rick Sharga, veteran of the California mortgage industry and CEO. -based CJ Patrick Co., a real estate consulting firm.
“Having access to capital markets is a competitive advantage in many cases,” said Sharga, noting that most of Quicken’s competition comes from the banking industry.
There might not be a better time in the mortgage industry to go public. Mortgage rates on Thursday hit another record low of 2.97% on average, according to Mortgage News Daily, which leads refinancing activity “bright red,” Sharga said. And low rates could stay that way for some time, with Federal Reserve Chairman Jerome Powell saying on Wednesday benchmark interest rates are not expected to rise until 2023.
“At first glance, you might say that because of the pandemic, it would be a bad time to do something like this,” Sharga said. “Strictly speaking, from a mortgage perspective, the market is right. “
A Quicken IPO would spotlight Detroit’s success as a growing tech hub after overcoming its 2013 bankruptcy, said Erik Gordon, a professor at Ross Business School at the University of Michigan.
“It will also highlight the fact that Quicken is here,” he said. “People in other parts of the country think of Detroit as cars, cars, cars. Well, surprise, the biggest mortgage lender is here.”
Public offerings slowed in March as COVID-19 sent shares to bear markets. This year, 76 companies including Warner Music Group, ZoomInfo and Vroom went public for a total market capitalization of $ 22 billion, according to the Nasdaq economic study.
Such unpredictability in the market could cause problems for four out of five companies, Gordon said. But “Quicken is one of that small group of companies that can go public even in these volatile times because it is not a wish and a hope company.”
And it’s not a permanent loser, like state-owned companies like Uber Inc. and Lyft Inc.: “Quicken is a real business,” he said. “In fact, it’s the biggest and best of its kind. If you buy stocks, they might go down, but at least it’s a company that knows how to make money.”
At the age of 22, Gilbert founded Quicken’s predecessor 35 years ago. He sold the business to Canadian financial software company Intuit Inc. for $ 532 million in 1999. Just three years later, Gilbert bought it back for $ 64 million.
In 2010, the company announced that it would move its headquarters to the One Campus Martius building in downtown Detroit from Livonia. The Quicken family of companies has since been a major driver of the city’s economic rival, investing billions in the purchase and rehabilitation of more than 100 buildings, mostly downtown. They include the tower soaring on the former grounds of the JL Hudson department store and an innovation center for the University of Michigan above the site of the Wayne County “failed prison”.
In total, Gilbert-owned companies are Detroit’s largest employer with more than 18,000 workers. And more are expected, as Quicken last month shared its intention to hire more than 1,500 people in the coming weeks.
Gilbert, after a stint in a drug rehab center in Chicago, returned to work. In his first public speech since his stroke in February, he has approached the podium in a wheelchair but has championed a bright future for the city.
“Whatever has happened in the last 10 years,” said Gilbert, “we are going to double in the next 10 years.”