Home Point Capital to Go Public on NASDAQ Friday

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Ann Arbor-based mortgage company Home Point Capital made an initial public offering on Friday, becoming the third nationally-listed mortgage company in Southeast Michigan to go public in recent months.

Home Point has listed 7.25 million shares at $ 13 per share for trading on the NASDAQ Global Select Market under the ticker symbol “HMPT”. The offer is smaller than what the company was targeting last week, when it predicted 12.5 million shares at $ 21.

“It was very important to Home Point, and we really felt for the mortgage industry, that Home Point was reaching the IPO milestone, so we adjusted the size of the offer to meet that target,” Maria Fregosi, Home Point’s chief investment officer, said in a phone interview on Friday morning.

The stock closed Friday afternoon at $ 11.32, down 13%.

Home Point was formed in 2015 as a result of a series of acquisitions and ranked 15th among mortgage lenders in the country in 2020 in terms of volume of origins, according to industry observer Inside Mortgage Finance.

The company employs 3,600 people nationwide, about 500 of whom live in southeast Michigan, and is backed by private equity firm Stone Point Capital, based in Greenwich, Connecticut.

Home Point’s IPO is considered a side bid because the company is not selling any shares and will not receive any net proceeds. On the contrary, Home Point’s original investors and private funders, through a subsidiary, will cash in just under 5% of their stake.

“We decided that the timing of the market was right for us to do an IPO, so they offered some of their shares on the open market. It’s basically about providing liquidity to our original shareholders. “said Fregosi.

“They ended up selling just under 5% of their stock, so it wasn’t that they were trying to divest from the company – they were just looking for some extra cash and getting Home Point to become a public company,” she added.

Last week, Home Point made a $ 550 million debt offer to provide the company with growth capital, Fregosi said.

“We have used it to repay some of our debt facilities; it will continue to give us room for growth capital for the remainder of the year,” she said.

Home Point is ranked by industry publications as the third largest wholesale lender in the country, which involves underwriting mortgages from brokers and is the same type of business as Pontiac-based United Wholesale Mortgage.

Home Point also offers mortgage services, direct-to-consumer loans and so-called correspondent loans, which buy closed mortgages made by other lenders and banks for the purpose of managing those loans.

After: United Wholesale Mortgage to go public on Friday morning

After: United Wholesale Mortgage CEO says he can grow in shrinking market, beat Rocket Mortgage

Mortgage lenders across the country have enjoyed strong profitability over the past year, due to a wave of mortgage refinancing activity sparked by historically low interest rates.

United Wholesale Mortgage went public last week on the New York Stock Exchange and Detroit-based Quicken Loans went public in August.

However, the mortgage market is expected to contract later in 2021, as the refinancing boom begins to fade.

According to documents filed by the SEC, Home Point reported that 68% of its business between 2020 and September 30 was mortgage refinances, up from 49% in 2019.

Fregosi said Home Point has not peaked and is poised to continue growing this year, noting how Fannie Mae is still planning some $ 4 trillion in total mortgages this year.

“So we still have a lot of growth potential, we believe,” she said. “Our ultimate goal is to be one of the top 10 mortgage originators.

Home Point considered going public like United Wholesale Mortgage did by merging with a blank check company known as the Special Purpose Acquisition Company or SPAC, but opted for a more conventional IPO. , Fregosi said. PSPCs have grown in popularity over the past year.

“We looked at both,” she said, “but we had always considered going public, so we had already laid down a lot of the groundwork. The PSPC route often means you can go a little faster, and we felt we didn’t need that extra speed to become a public company, which was why we decided to go the route. of the more traditional and old-fashioned IPO. “

Fregosi also explained why Home Point chose NASDAQ over the New York Stock Exchange, where Rocket Companies and United Wholesale Mortgage are listed.

“We really felt that NASDAQ matched the personality of Home Point – a young, high growth company a little better. It sounds like the type of companies that end up on NASDAQ, ”she said.

Home Point’s action is to pay a quarterly dividend of 15 cents per share.

A non-bank lender, Home Point has funded a total of $ 46 billion in mortgages in the 12-month period through September 30, according to its SEC filing, and holds a 1.3% stake of the global mortgage market.

The company reported net profit of $ 422.6 million in the first three quarters of 2020. It reported a net loss of $ 29.2 million for all of 2019 and a net loss of 24.1 million dollars for 2018.

The number of Home Point employees increased from 3,600 after the start of 2020 to around 1,500.

Home Point also owns a 49.7% stake in New Jersey-based Longbridge Financial, a reverse mortgage lender.

Contact JC Reindl: 313-222-6631 or [email protected]. Follow him on twitter @jcreindl. Learn more about business and subscribe to our company newsletter.

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