The parent company of Quicken Loans has filed for an initial public offering in a bet on the growth potential of digital mortgage solutions.
All the companies under the Rocket Companies umbrella of billionaire Dan Gilbert will be part of the IPO, according to the filing. Industry publications rank Rocket as the nation’s No. 1 direct-to-consumer mortgage lender.
“Our growth potential is significant,” the IPO prospectus says. “The U.S. residential mortgage market remains highly fragmented. As the largest retail mortgage originator according to Inside Mortgage Finance, we serve 9.2% of an over $2.0 trillion annual market. As adoption of online mortgages increases, we expect to drive further market share growth.”
Since 2015, Quicken Loans has offered Rocket Mortgage, an end-to-end online mortgage application process. According to the prospectus, Rocket Mortgage originated $145 billion in loans last year, or 6.7% of the total market.
“Our digital-first brand is a driver for growth in this highly-fragmented market,” Quicken Loans CEO Jay Farmer said.
The company sees particular room for growth among millennials, noting that the millennial homeownership rate, at approximately 32%, “significantly lags the rates of Generation X and Baby Boomers.”
“Homeownership remains a top priority among approximately 70% of millennials and their homeownership rate should trend higher as they continue to build wealth,” it said. “These consumers increasingly demand a fully digital experience.”
Gilbert, the owner of the NBA’s Cleveland Cavaliers, founded his mortgage empire as Rock Financial in 1985. After selling it in 1999 to Intuit, the maker of Quicken software products, he continued to lead the company, rebranded as Quicken Loans, and bought it back from Intuit in 2002.
Rocket Companies’ subsidiaries also include title company Amrock, home search platform Rocket Homes, and personal loans provider Rocket Loans. It reported $5.1 billion in total revenue and $894 million in net revenue in 2019 and, for the first three months of 2020, it had $97 million in net income, compared with a net loss of $299 million a year earlier.
After the IPO, Gilbert would retain control of Rocket through 79% of the combined voting power of the common stock.