Gilbert’s Rocket Cos. Jumps in Debut After Scaled-Back IPO

(Bloomberg) -- Shares in Rocket Companies Inc., the parent of the mortgage giant founded by billionaire Dan Gilbert, gained almost 20% in its trading debut after a shrunken initial public offering that raised $1.8 billion.

The Detroit-based company fell short of raising as much as $3.3 billion as it had targeted in the IPO.

Rocket, which operates Quicken Loans and Rocket Mortgage, closed at $21.51 in New York trading Thursday, giving it a market value of about $42 billion based on the outstanding shares listed in its filings. The company sold 100 million shares for $18 each on Wednesday after earlier marketing 150 million of them for $20 to $22 apiece.

The diminished listing came 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 said.

“We really think of ourselves as a tech platform,” Jay Farner, chief executive officer of Rocket said Thursday in an interview with Bloomberg Television. “The growth, the scale of our platform I think is unrivaled.”

Farner added that while the company benefits from the refinancing boom caused by low interest rates, it focuses on a market of $2 trillion a year of mortgages that includes home purchases and refinancing.

Rocket describes itself as the largest retail mortgage lender in the U.S. Gilbert, who founded Quicken Loans in 1985, will retain 79% of the voting power of the company's common stock through controlling entities, the filings show.

The IPO brings Gilbert's net worth to about $34 billion, more than three times the previous estimate on the Bloomberg Billionaires Index. It means for now he's among the 40 richest people on the planet, ahead of Blackstone Group Inc.'s Stephen Schwarzman, casino magnate Sheldon Adelson and cosmetics titan Leonard Lauder. Gilbert, who was chief executive officer of Quicken Loans until 2002, is also the owner of the National Basketball Association‘s Cleveland Cavaliers.

For More: Dan Gilbert's Wealth Soars to $34 Billion After Rocket IPO

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. -- had priced below a marketed range, according to data compiled by Bloomberg.

Companies have raised about $62 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's offering was led by Goldman Sachs Group Inc., Morgan Stanley, Credit Suisse Group AG, JPMorgan Chase & Co. and Royal Bank of Canada. The shares are trading on the New York Stock Exchange under the symbol RKT.

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