Lone Star Funds‘ residential mortgage lender Caliber Home Loans hopes to raise up to $538 million at its highly anticipated public debut next week, according to documents filed with the Securities and Exchanges Commission on Wednesday.
Caliber, based in Coppell, Texas, plans to raise upwards of $423 million by selling over 26.4 million Class A sales, plus $115 million in preferred stock, according to the amended S-1. The Class A common stock is priced at a maximum of $16 a share, while the preferred stock has a maximum price of $50 a share. If the stock trades at the $15 midpoint, Caliber will be valued at roughly $1.8 billion.
The terms of the IPO allows the underwriters – Credit Suisse, Goldman Sachs, BofA Securities, Barclays, Citigroup, among others – to purchase 3.45 million shares of common stock and 300,000 shares of the overall 2.3 million in preferred stock.
The selling stockholder, LSF Pickens Holdings, an affiliate of Lone Star, will own nearly 81% of the common stock following the IPO, the prospectus says.
If you were still left wondering who would benefit from the IPO, wonder no more. “The selling stockholder [Lone Star’s affiliate] will receive all of the net proceeds from the sale of shares of our common stock offered pursuant to this prospectus,” the S-1 reads.
In the prospectus, Caliber also revealed that it paid Lone Star a dividend of $150 million in cash on Sept. 30 and another $150 million in cash to Lone Star on Oct. 20. Caliber further said it has “no present intention to pay cash dividends on our common stock.”
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Caliber is expected to begin trading on the New York Stock Exchange under the ticker HOMS on Oct. 29.
The nonbank lender, headed by former Citi mortgage executive Sanjiv Das, operates in retail, wholesale and correspondent channels, and has developed a large book of business in the purchase space. It originated about $36 billion in mortgages during the first half of the year and has ramped up its direct-to-consumer business.
“Our track-record of success in originating and servicing mortgages is supported by robust capabilities, spanning operations, technology, analytics, capital markets and risk management,” the nonbank lender said in its S-1. “These capabilities have enabled us to drive outsized growth and attractive financial results. Our origination volume has increased at a 39% CAGR since 2013 to $61 billion for the year ended December 31, 2019, versus a 3% CAGR of the overall mortgage market. Our steady growth and market leadership has led to net income of $275 million and a return on equity of 45% for the six months ended June 30, 2020.”
Yet just a year ago – like many mortgage lenders – Caliber posted a net loss of $59.4 million for the six months that ended June 30, 2019.
Caliber retains servicing on the vast majority of the mortgages it originates. According to the prospectus, the change in fair value of MSRs was negative $320 million for the six months that ended June 30, 2020, a decrease of $24.8 million from the year prior.