Quicken Loans files IPO paperwork, to be called Rocket Companies
Detroit-based Quicken Loans filed documents Tuesday afternoon to go public with the mortgage company under the new name Rocket Companies, but will keep founder Dan Gilbert in check.
the filing with the United States Securities and Exchange Commission is a preliminary application for listing on the New York Stock Exchange. The app does not give a date for the initial public offering or the price per share.
Gilbert, founder and chairman of Quicken Loans, would retain significant control of Rocket Companies after the IPO, according to the app. The Rocket Companies ticker symbol would be “RKT”.
Rocket Companies is made up of several Gilbert-owned companies – not just Quicken Loans – which together employ approximately 20,000 people.
Other companies under the Rocket umbrella include title company Amrock, home search platform Rocket Homes, personal loan provider Rocket Loans, call center Rock Connections, and a car company. opportunity called Rocket Auto, which is relatively new.
The company has phased out its “Quicken Loans” brand in recent years in favor of the “Rocket” brand, which it describes as “synonymous with providing simple, fast and reliable digital solutions for complex personal transactions”.
Industry publications rank the company as the number one direct-to-consumer mortgage lender in the country.
Gilbert keeps the reins
The coronavirus pandemic and the economic fallout from the spring dampened the IPO market, but activity increased in June, with many offerings having a digital focus. Online used car seller Vroom, for example, skyrocketed from its first day of trading.
David Kudla, CEO of Mainstay Capital Management, said the SEC filing indicates that Gilbert will essentially have full control of the company through 79% of the combined voting rights of the common stock.
“The deal is being built so that Dan Gilbert retains a ‘super majority position’,” Kudla said.
He said a super majority is generally classified as 67% to 90% property. “Essentially Dan Gilbert maintains full control of the business,” he said.
Gilbert, 58, is recovering from a severe stroke he suffered in May 2019.
The file publicly discloses key financial details about Gilbert’s businesses for the first time.
Rocket Companies achieved total revenue of $ 5.1 billion and net revenue of $ 894 million in 2019. For the first three months of 2020, the company reported net profit of $ 97 million dollars, against a net loss of $ 299 million for the same three months in 2019.
The majority of Quicken Loan’s mortgage business involves refinancing business, according to the record, and 27% of its mortgage origination volume last year was home purchases.
“Historically, our origins have been more heavily refinanced than the entire origins market,” indicates the file.
Most of the $ 145 billion in mortgages Quicken created last year, or 91%, was sold to government-backed entities such as Fannie Mae and Freddie Mac, who insure those loans against default. This means that Quicken generally wouldn’t be on the hook if those mortgages deteriorated later.
Quicken then services all of the mortgages it sells to government-funded entities by collecting and advancing principal and interest payments from borrowers to the investors who will ultimately hold the loans.
Overall, about 5% of all mortgages provided by Quicken Loans were forborne as of June 30, with borrowers not making payments due to the coronavirus pandemic. Abstentions have yet to be a major issue for Quicken, the filing said.
The record discloses the sources of Quicken’s sources of funding to make its mortgages. The company has nine “loan finance facilities” that can provide up to $ 16.25 billion, of which seven are from large global financial institutions.
In addition, as of May 31, the company had approximately $ 2.6 billion in cash and $ 1.2 billion in unused lines of credit.
When it comes to salary disclosures, Jay Farner, CEO of Quicken Loans, earned a total of $ 11.7 million last year, which breaks down into a base salary of $ 650,000 and over $ 11 million. bonus dollars.
Power of ISMs
The brief includes many details about Gilbert’s “ISMs,” or the basics of doing business at Rocket Companies that serve as a “cultural operating system to guide decision-making by all of our team members.”
“Each of the approximately 20,000 members of our team is empowered to apply ISMs in all aspects of their work and life,” the dossier states. “ISMs define our culture and the way we do business, and this combination of an empowered team with a common, well-defined mission provides us with a significant strategic advantage in the marketplace.”
Gilbert launched Quicken Loans in the mid-1980s under the name Rock Financial.
The company became one of the first online mortgage lenders in the late 1990s, after years of physical branches, and in 1998 it went public. At the time, Rock Financial was only part of Quicken’s current size.
Rock Financial was sold in 1999 to Intuit, the maker of Quicken software products, in a deal valued at $ 532 million. Gilbert continued to run the rebranded company, and in 2002, along with a group of private investors, bought it from Intuit for $ 64 million in a deal that included Title Source, now called Amrock.
Quicken Loans continues to license Intuit’s Quicken name and brand in a perpetual “royalty-free” agreement, the record says.
Meet the board
Gilbert’s wife Jennifer Gilbert, 51, is on the board of directors of Rocket Companies.
The other directors and officers are:
- Dan Gilbert, Chairman of the Board
- Farner, CEO and Director
- Robert Walters, President and Chief Operating Officer
- Julie Booth, Financial Director and Treasurer
- Angelo Vitale, General Counsel and Secretary
- Matthew Rizik, a director
- Suzanne Shank, a director
- Nancy Tellem, a director
New product coming soon
The filing also says the company is currently developing a new automated underwriting product called “RocketLogic” that will overhaul the way it grants loans.
“RocketLogic leverages data and asks dynamic questions, which allows the client to close their mortgage faster and with greater accuracy,” he says.