Key Highlights

  • Compass, a residential brokerage, filed draft IPO registration statement with US Securities and Exchange Commission
  • LoanDepot filed for initial public offering (IPO) within last week as well

Both Compass and LoanDepot announced this last week that the respective companies had filed statements with the US Securities and Exchange Commission (SEC) to “go public” via Initial Public Offerings or IPOs. Both of these companies had considered such moves in the past but now, in this record-low interest rate environment, the timing of pursuing public financing appears to be right and ripe for both of them.

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Record-low interest rates have provided an enormous boost to both the mortgage lending business and to residential brokerage firms. According to the Mortgage Bankers Association’s most recent forecast, the mortgage industry is expected to originate more than +$3.1T in mortgage loans in 2020 representing an increase of 45% from 2019 and the highest origination volume in years.

LoanDepot intends to list on the New York Stock Exchange under the symbol LDI. The company listed revenue of $1.3B loans in 2019 and $3.3B in revenue during the first nine months of 2020 and net income of $1.47B compared to $18M in 2019.

Last valued at $6.4B in 2019, Compass joined residential brokerage rivals such as Realogy, Keller Williams, eXp Realty, Zillow and others to enjoy a record-setting year in home sales and exploding revenues in 2020. Again, as in the mortgage lending business, record-low interest rates led to a blast in residential home sales during 2020.

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Neither Compass nor LoanDepot knows how many shares their companies will be available via their respective proposed public offerings nor has the price range for those shares in either company been determined. All that both companies do know, however, is that, according to Chris Whalen, banking analyst and chairman of Whalen Global Advisors, “This (low interest rate) opportunity’s not going to go away…” and that the stock market’s on a roll.

Thanks to InmanNews, the Real Deal and MarketWatch.

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