Mortgage Servicers

Quicken Loans is Secretly Working with Goldman Sachs and Morgan Stanley to Launch Blockbuster IPO

Quicken Loans is working with Morgan Stanley, Goldman Sachs, Credit Suisse, JPMorgan to manage the deal, which would be the largest IPO in mortgage history.

Quicken Loans IPO: Why it may need the cash and who gets rich

If and when Quicken Loans launches an initial public offering this year, the event could upend the business pecking order in Detroit — at least in the eyes of Wall Street.

Originally Published: June 20, 2020

With a potential valuation in the “tens of billions,” according to a report by CNBC, the downtown-based mortgage giant could potentially exceed the market value of Ford Motor Co. ($25 billion) and perhaps approach that of General Motors ($38 billion). In such a scenario, the Quicken IPO could be the moment that Detroit becomes as much the Mortgage City as it is the Motor City.

“They might be bigger than GM the day they do this IPO,” said Van Conway, a metro Detroit business consultant and head of Van Conway & Partners. “Wall Street doesn’t like car companies, so it is kind of unfair to compare them, but that’s all we have in Detroit.”

Quicken Loans has yet to confirm or deny the CNBC report last week that it is secretly planning an IPO that may be unveiled as soon as July. The report, citing unnamed sources, said Quicken is working with Goldman Sachs, Morgan Stanley, Credit Suisse and JPMorgan, and that its multibillion-dollar IPO could be the biggest of the year.

An IPO is when a company first sells shares of its stock on a public market to generate capital, which can be used to fund growth and other purposes.

Finance and business experts say there are various reasons why Quicken Loans, a large and established company, could be looking to go public. They also note how unlike many recent IPOs, Quicken would be launching an IPO not as a young startup eager to dethrone incumbents, but from its already top position in the mortgage industry.

“Quicken Loans is not your typical IPO company — both the kind of business that it is in and the size of the company,” said Amiyatosh Purnanandam,a finance professor at the University of Michigan’s Ross School of Business. “So it will be a unique IPO. And it will be an IPO that a lot of people watch carefully, because we’re talking about billions of dollars here.”

Some possible reasons for Quicken’s decision to go public could include:

Cashing out founder and Chairman Dan Gilbert, 58, who suffered a serious stroke in May 2019 and may wish to curtail his involvement and shore up his estate planning.

To capitalize on the current strength of Quicken’s mortgage business, which has been setting company records amid low interest rates and high refinancing activity.

Growing Quicken’s cash cushion to withstand any future shock or crisis. The company’s mortgage servicing business recently saw an industry-wide liquidity scare prompted by fears of borrowers missing payments due to the coronavirus pandemic.

“Raising equity is in my mind a good strategy at a time like this,” Purnanandam said. “One thing COVID has done is make it very clear that companies should have more equity. When you have more equity cushion, you can sustain these negative economic shocks … so maybe that’s what’s going on here.”

A Quicken Loans spokesman did not respond Friday to a request for comment.

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Quicken Loans is Secretly Working with Goldman Sachs and Morgan Stanley to Launch Blockbuster IPO
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