Rocket Companies Targets $3.8B IPO As Roadshow Kicks Off

Detroit-based mortgage giant Rocket Companies Inc. RKT filed new documents Tuesday, updating investors on its IPO plans as it sets out on its sales pitch roadshow.

What Happened? On Tuesday, Rocket said it plans to raise as much as $3.8 billion by selling 150 million IPO shares at a target offering price range of between $20 and $22. The $3.8-billion target would represent an overall valuation of around $43.7 billion for the company.

Rocket Companies is seeking to list on the New York Stock Exchange under the ticker "RKT."

Why It’s Important: The IPO would be by far the largest of 2020, surpassing Royalty Pharma plc RPRX at just $2.2 billion.

Rocket Companies was founded in 1985 by billionaire Dan Gilbert, and its leading brands include Rocket Mortgage, Rocket Homes, Rocket Loans, Rocket Auto, Rock Central, Amrock, Core Digital Media, Rock Connections, Lendesk and Edison Financial.

Rocket has said it expects a profit of more than $3 billion in the second quarter of 2020. In the first quarter of 2020, Rocket reported $1.36 billion in revenue. The company guided for full-year revenue of between $4.93 billion and $5.13 billion, five times more than its 2019 total.

The company said historically low interest rates have generated a boom in mortgage refinance originations this year.

As of June 30, Rocket said an estimated 98,000 customers and 5.1% of serviced loans were on forbearance plans.

Rocket’s IPO underwriters include Goldman Sachs Group Inc GS, Morgan Stanley MS and Credit Suisse.

Benzinga’s Take: The timing for the Rocket IPO could not be better given March interest rate cuts will likely generate massive profits for Quicken in the second quarter. In coming quarters, IPO investors will need to determine what the new normal will be for Rocket’s lending business given the ongoing economic difficulties and a longer-term environment of near-zero interest rates.

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Quicken Loans Chairman Dan Gilbert. Photo by Emily Elconin.