Quicken Loans Planning for a July IPO?

The word on the IPO market is that one of the largest mortgage lenders in the U.S. could be planning for a July IPO. That company is Detroit, Michigan-based Quicken Loans.


by Monica Savaglia

Quicken Loans is different from every other mortgage lender because it relies on wholesale funding for its loans and uses online applications rather than a branch system. Throughout 2013 and 2017, the company closed more than $400 billion of mortgage volume across all 50 states. The company is thriving and without a doubt has made a name for itself.

Quicken Loans CEO Jay Farner has indicated that the company forecast nearly $75 billion in mortgage applications in the second quarter, which is up almost $53 billion from the first quarter. And that number could go even higher as the year progresses. Mortgage rates set a new record low on June 11 — the average rate on a 30-year fixed mortgage loan decreased to 3%.

When asked about a potential IPO, Farner said this in a recent interview:

Of course our mission in Detroit and Cleveland and you know, Phoenix, Arizona, have been taking care of our clients. So at this point in time lots of rumors and speculation, but we’re going to continue to focus on what we do best, which is remain the largest lender in the country, take care of our clients and help them save money during this really important time. 

It has been rumored that the company could be working alongside Goldman Sachs and Morgan Stanley, two of the biggest banks, to prepare its public offering. This would be one of the biggest deals of the year — I’m talking multibillion-dollar big.

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Quicken Loans is already a leader in the mortgage industry. You could speculate that one of the main reasons it’s deciding to go public now is to earn some money to finance possible acquisitions or grow its business. The company isn’t a startup looking to make a name for itself.

Amiyatosh Purnanandam, a finance professor at the University of Michigan’s Ross School of Business, had this to say about Quicken Loans’ potential IPO:

Quicken Loans is not your typical IPO company — both the kind of business that it is in and the size of the company. So it will be a unique IPO. And it will be an IPO that a lot of people watch carefully because we’re talking about billions of dollars here.

Quicken Loans’ IPO would come at a unique time as it’s benefiting from the current environment in the loan industry. It has been setting records amid low-interest rates and high refinancing activity. There is a lot of strength in the mortgage business, and it would be careless if the company didn’t take advantage of it.

Purnanandam continued:

Raising equity is in my mind a good strategy at a time like this. One thing COVID has done is make it very clear that companies should have more equity. When you have more equity cushion, you can sustain these negative economic shocks… so maybe that’s what’s going on here.

With it already benefiting from strong demand, Quicken Loans has the opportunity to go public and use the proceeds to build up its equity so it can sustain future market volatility.

The IPO market has experienced a strong uptick in the past month. There are more companies going public every week — most of which are companies in the health care (NYSEARCA:XLH) industry. But that doesn’t mean investors wouldn’t be interested in an IPO from Quicken Loans. Most experts are calling a Quicken Loans IPO a “blockbuster deal.” Not to mention, the Mortgage Bankers Association said that mortgage applications soared 9.3% in the first week of June when compared to the previous week.

David Kudla, CEO of Mainstay Capital Management, said:

The environment is good for IPOs in general. Quicken is at an advantage compared to many new businesses coming to market for an IPO in that they are an established brand and a company with a stable, profitable business model.

That’s a very important statement. An IPO from Quicken Loans wouldn’t be surrounded by future-growth hype; the company has been around and is profitable — even at a stressful and uncertain time.

Quicken Loans has already filed an IPO prospectus, so we could see an IPO soon while the company has momentum. If you’re interested in learning more about a public offering from Quicken Loans and other IPO news, click here.