Rocket, Quicken Loans Parent, Prepares Big IPO, Set To Raise $3.3 Billion

Rocket Cos. Inc., the parent of Quicken Loans, expects to raise about $3.3 billion in its initial public offering late Wednesday. That would make it the second-largest IPO so far this year after Pershing Square Tontine Holdings (PSHZF) – controlled by hedge-fund billionaire Bill Ackman – raised $4 billion IPO last month.

Rocket expects to sell about 150 million shares, priced at between $20 to $22 a share.

Rocket shares are expected to begin trading on Thursday on the New York Stock Exchange under the ticker symbol RKT.

The Wall Street Journal noted that the U.S. mortgage market has somehow withstood the onslaught of the COVID-19 pandemic. The Mortgage Bankers Association expects mortgage originations to reach their highest levels this year since 2005. Refinancings have been triggered by all-time low mortgage rates.

Upon completion of the IPO, Quicken founder Dan Gilbert will hold 79% of the voting power of the company’s common shares. Gilbert also owns the NBA's Cleveland Cavaliers.

Rocket serves customers in all 50 states and originated over $145 billion in residential mortgage loans last year. In the first quarter of 2020, it originated $51.7 billion.

Based in Detroit, Rocket reported that its net income rose 46% last year.

Rocket said last month it expected to report second-quarter profit of more than $3 billion.

As banks have scaled back from mortgage originations, nonbanks like Quicken Loans have stepped into the void. Nonbanks issued 59% of U.S. mortgages last year, an all-time record.

For the first half of 2020, Quicken was the largest mortgage lender, ahead of Wells Fargo (WFC), United Wholesale Mortgage, PennyMac Financial and JPMorgan Chase (JPM).

"Right now it's a very hot IPO market. Some big names could be coming in the near future," IPO Boutique analyst Jeff Zell told Investors Business Daily.