Rocket Companies Inc., the parent of the Detroit-based mortgage giant founded by billionaire Dan Gilbert, is expected to begin trading this morning on the New York Stock Exchange after a downsized initial public offering.
Rocket, which operates Quicken Loans Inc. and Rocket Mortgage, sold 100 million shares at $18 each, making the IPO's value total $1.8 billionand valued the company at around $36 billion. Rocket Companies had earlier filed to sell 150 million shares at $20-$22 each, hoping for a larger offering totaling $3.3 billion.
At $18, it is the third-largest U.S. IPO of the year.
The reduction comes as investors pushed back on the company's valuation, believing it should be priced as a consumer or financial company rather than a technology business, a person familiar with the matter told Bloomberg.
A representative for Rocket Companies declined comment.
Gilbert and Quicken Loans CEO Jay Farner are scheduled to ring the NYSE opening bell to celebrate the company’s initial public offering and first day of trading. Rocket’s shares will trade under the ticker symbol RKT.
The downsizing may signal the IPO market's rebound is straining as the coronavirus pandemic deepens across much of the U.S. Since mid-March, only one major listing — supermarket chain Albertsons Cos. — has priced below a marketed range, according to data compiled by Bloomberg.
Companies have raised about $61 billion through first-time share sales on U.S. exchanges this year, compared with $50 billion for the same period in 2019, the data shows. That includes a record amount for so-called blank-check companies — $24 billion, almost double the volume for all of 2019.
Rocket describes itself as the largest retail mortgage lender in the United States. Gilbert, who founded Quicken Loans in 1985, will retain 79 percent of the voting power of the company's common stock through controlling entities, the filings show.
Gilbert, who was CEO of Quicken Loans until 2002, is also the owner of the National Basketball Association's Cleveland Cavaliers. He has a net worth of $8 billion, according to the Bloomberg Billionaires Index.
Rocket's offering is being led by Goldman Sachs Group Inc., Morgan Stanley, Credit Suisse Group AG, JPMorgan Chase & Co. and Royal Bank of Canada.
— Bloomberg contributed to this report.
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