A wave of mortgage lenders tests the IPO waters

The mortgage space is heating up and ripe for public offerings, with three residential mortgage lenders pricing in October: Guild Holdings (GHLD), AmeriHome (AHM), and Caliber Home Loans (HOMS).

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A highly cyclical space, the uptick in IPO activity comes amid record low interest rates driving a spike in originations, with increased gain-on-sale margins, despite some headwinds from COVID-19 on the servicing side. As a result of higher mortgage activity and tech-enabled platforms, all three companies have delivered exceptional results in the 1H20, more than doubling revenue year-over-year and demonstrating margin improvement.

Set to begin trading on Thursday, Guild Holdings (GHLD) plans to raise $153 million at a $1.1 billion market value. The relationship-based retail mortgage lender has 1,000 loan officers across 31 states, mainly on the West Coast and in the South. Guild has grown its market share and geographic footprint both organically and through acquisitions, and it has strategically focused on making purchase loans to first-time home buyers.

On the calendar for next week, AmeriHome (AHM) plans to raise $250 million at a $1.3 billion market value. AmeriHome’s flexible and scalable platform has allowed the company to produce strong growth and performance, with 21 consecutive quarters of profitability and production volume growth of 187% from 2015 to the LTM 2Q20.

Caliber Home Loans (HOMS) plans to raise $345 million at a $1.8 billion market value. With a diversified, customer-centric platform, Caliber focuses primarily on the purchase market and is the second largest independent mortgage originator based on purchase volume since 2016.

U.S. IPO Calendar
Issuer
Business
Deal Size
Market Cap
Price Range
Shares Filed
Top
Bookrunners
Guild Holdings (GHLD)
San Diego, CA
$153M
$1,102M
$17 – $19
8,500,000
Wells Fargo
BofA
Provides personalized mortgage services and loan origination.
AmeriHome (AHM)
Thousand Oaks, CA
$250M
$1,287M
$16 – $18
14,705,882
Credit Suisse
Goldman
Residential mortgage producer and servicer.
Caliber Home Loans (HOMS)
Coppell, TX
$345M
$1,813M
$14 – $16
23,000,000
Credit Suisse
Goldman
Residential mortgage producer and servicer.

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The latest mortgage IPO candidates follow the solid performance from leading online mortgage lender Rocket Companies (RKT). One of the largest IPOs of the year, Rocket is up 11% from its August offering, benefiting from both the favorable environment and the ongoing shift to digital.

Another mortgage lender making headlines, United Wholesale Mortgage recently announced a merger agreement with Gores Holdings IV (GHIV). The #1 wholesale mortgage lender in the US, UWM would be valued at $16 billion, making it the largest SPAC transaction to date.

The article A wave of mortgage lenders tests the IPO waters originally appeared on IPO investment manager Renaissance Capital’s web site renaissancecapital.com.

Investment Disclosure: The information and opinions expressed herein were prepared by Renaissance Capital’s research analysts and do not constitute an offer to buy or sell any security. Renaissance Capital’s Renaissance IPO ETF (symbol: IPO), Renaissance International ETF (symbol: IPOS), or separately managed institutional accounts may have investments in securities of companies mentioned.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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