Chase Tower, owned by Bedrock Real Estate Services, is home to Quicken Loans and is viewed looking north from Woodward from One Detroit Center in 2015 in Detroit. (Photo: Salwan Georges, Detroit Free Press)
Detroit-based Quicken Loans filed documents to publicize the mortgage company under the new name Rocket Companies on Tuesday afternoon, but will keep founder Dan Gilbert under control.
The filing with the United States Securities and Exchange Commission is a preliminary application for a listing on the New York Stock Exchange. The app does not provide a date for the initial public offering or the price per share.
Gilbert, founder and president of Quicken Loans, would retain significant control of missile companies after the IPO, according to the application. The stock symbol of Rocket Companies would be “RKT”.
Rocket Companies includes several Gilbert owned companies – not just Quicken loans – that employ around 20,000 people.
Other companies under Rocket’s umbrella include Amrock-owned company, Rocket Homes home search platform, Rocket Loans personal loan provider, Rock Connections call center and a used car company called Rocket Auto which is relatively new. .
In recent years the company has gradually phased out the “Quicken Loans” brand in favor of the “Rocket” brand, which it defines as “synonymous with providing simple, fast and reliable digital solutions for complex personal transactions.”
Industry publications classify the company as the nation’s first consumer direct mortgage lender.
More: Quicken Loans IPO: why money might be needed and who gets rich
More: Quicken loans can offer shares to the public, CNBC reports
Gilbert holds the reins
The coronavirus pandemic and the economic fallout in the spring slowed the IPO market, but activity increased in June, with many offers focused on digital. The online used car salesman Vroom, for example, skyrocketed on 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 power of the ordinary shares.
“The deal was built so that Dan Gilbert maintains a” super majority position “,” said Kudla.
He said a super majority is generally classified as 67% to 90% owned. “In essence, Dan Gilbert remains in full control of the company,” he said.
Gilbert, 58, is recovering from a serious stroke he suffered in May 2019.
Detroit businessman Dan Gilbert received Crain’s Newsmaker of the Year award at the Grand Ballroom at the MGM in February 2020. It was his first major public appearance since he suffered a severe stroke in May 2019. (Photo: Mandi Wright, Detroit Free Press)
The filing reveals key financial details of Gilbert’s activities for the first time.
Rocket companies reported total revenues of $ 5.1 billion and net revenues of $ 894 million in 2019. For the first three months of 2020, the company reported a net profit of $ 97 million, against a net loss of $ 299 million for the same three months in 2019.
Most of Quicken Loan’s mortgage business involves refinancing, according to the file, and 27% of its mortgage origination volume last year was home purchases.
“Historically, our origins have been more heavily refinanced than the overall origin market,” says the file.
Most of the $ 145 billion mortgages that originated from Quicken last year, or 91%, were sold to government-backed entities such as Fannie Mae and Freddie Mac who insure these loans against default. This means that Quicken would not be in good standing if these mortgages tightened.
Quicken then provides assistance to all mortgages it sells to government-backed entities by raising and advancing borrowers’ capital and paying interest to investors who will eventually own the loans.
Overall, approximately 5% of all mortgages provided by Quicken Loans services were in distress as of June 30th with borrowers not making payments due to the coronavirus pandemic. Tolerances have yet to present a significant problem for Quicken, says the filing.
The deposit reveals the sources of Quicken’s funding sources for making its mortgages. The company has nine “loan financing instruments” capable of providing up to $ 16.25 billion, seven of which are 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 credit lines.
As for salary information, Quicken Loans CEO Jay Farner grossed $ 11.7 million last year, which broke with a base salary of $ 650,000 and over $ 11 million in bonus cash.
Power of the ISM
The repository includes detailed details of Gilbert’s “ISMs” or basics of doing business at Rocket Companies that act as a “cultural operating system to guide decision making for all members of our team.”
“Each of our approximately 20,000 team members has the power to apply ISMs in all aspects of their work and lives,” says the document. “ISMs define our culture and the way we conduct business, and this combination of an enabled team with a common and well-defined mission provides us with a significant strategic advantage in the market.”
Gilbert started Quicken Loans in the mid-1980s under the name Rock Financial.
The business became one of the first online mortgage lenders in the late 1990s, after years of physical branches, and in 1998 made an IPO. At the time, Rock Financial was only a fragment of Quicken’s current size.
Rock Financial was sold in 1999 to Intuit, the manufacturer of Quicken software products, in a deal worth $ 532 million. Gilbert continued to lead the renamed company and, in 2002, with a group of private investors, he repurchased it from Intuit for $ 64 million in an agreement that included Title Source, now called Amrock.
Quicken Loans continues to license Intuit’s Quicken name and brand under a perpetual “binding” agreement, the file says.
Meet the board
Gilbert’s wife, Jennifer Gilbert, 51, is a member of the board of directors of Rocket Companies.
The other directors and managers are:
- Dan Gilbert, chairman of the board
- Farner, CEO and director
- Robert Walters, president and general manager
- Julie Booth, chief financial officer and treasurer
- Angelo Vitale, general councilor and secretary
- Matthew Rizik, a director
- Suzanne Shank, a director
- Nancy Tellem, a director
Read or share this story: https://www.freep.com/story/money/business/2020/07/07/quicken-loans-files-ipo-paperwork-rocket-companies/5394080002/