Home Point Capital, the parent company of Michigan-based wholesale lender Homepoint, intends to raise $94.25 million dollars in its IPO on Friday.
That’s a significant downsizing from the $250 million its private equity backers planned to raise through the sale of 12.5 million shares priced between $19 and $21.
Instead, the lender and servicer plans to price 7.25 million shares of common stock at $13.00 per share on Friday morning, the company said in a statement late Thursday evening.
Home Point Capital itself is not selling any shares in the offering, but funds affiliated with its private equity backer Stone Point Capital are cashing out. Those stockholders have also granted the underwriters – which include Goldman Sachs, Wells Fargo, Morgan Stanley and UBS Investment Bank – the option to purchase an additional 1.087 million shares of common stock.
The company will trade on the NASDAQ Stock Exchange under the ticker symbol “HMPT.” The offering is expected to close on Feb. 2.
Separate to the Homepoint IPO, Home Point Capital raised $500 million in a debt offering earlier this month, returning half of the proceeds to original investors and shareholders affiliated with its private equity backers.
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The parent company of Homepoint originated $46.3 billion through its broker network in the 12 months that ended Sept. 30, 2020. It originated a total of $38 billion in loans through the first three quarters of 2020, according to the S-1. It’s a phenomenal rise for a lender that originated just $10.6 billion in 2018 and at one point had a retail operation.
The $38 billion origination figure makes Homepoint the third-largest wholesale lender in America, behind United Wholesale Mortgage and Rocket Pro TPO, and ahead of Texas-based multi-channel rival Caliber Home Loans. Overall, Home Point ranks as the 10th largest non-bank originator in the United States.
Homepoint, led by CEO Willie Newman, has taken a different approach than most of its rivals. It services all of its loans.
According to the company’s S-1, its servicing book rose to $74 billion from $48 billion in 2019, with 307,000 mortgages being serviced. Homepoint’s MSR multiple checked in at 2.6x in the first nine months of 2020, down from 3.2x during the same period in 2019, according to the disclosures. Homepoint also has a delinquency rate of 60 days-plus at 6.6%.
Though it’s best known for its wholesale channel, Homepoint also operates in the correspondent channel, purchasing loans already issued to end-borrower customers, as well as the direct channel, mostly refinancing its own clients.
Homepoint’s potential IPO won’t come as a surprise to most observers, given its backing by private equity firm Stone Point Capital. Ahead of its public offering, the wholesale lender’s parent company looked to raise $500 million in debt in a private placement sale, giving its underwriters the option to buy shares.
Earlier this month, Home Point Capital announced that it had brought on Fannie Mae‘s former head of single family lending, Andrew Bon Salle, as chairman of its board.
Homepoint’s IPO follows that of United Wholesale Mortgage, the top wholesale lender in the country, which went public a week ago, opening trading at $11.95 a share. UWM’s price, however, has scuffled, closing Thursday at $9.96 a share.
This story was updated at 10:01 a.m. EST on Friday, Jan. 29