loanDepot Prices IPO Significantly Lower, Shares Float on NYSE

loanDepot lowered the price of its initial public offering (IPO) to $14 a share – far below its expected $21 a share float.

loanDepot shares, trading under the ticker symbol LDI, listed on the New York Stock Exchange (NYSE) today trading higher in early action.

Originally, loanDepot had anticipated listing 17.25 million shares raising a gross amount of approximately $362.25 million. In a release, loanDepot cut back on the share offering to just 3.85 million shares.

loanDepot said it has granted the underwriters a 30-day option to purchase up to an additional 577,500 shares of Class A common stock at the IPO price, less underwriting discounts, and commissions.

loanDepot said it will use the net proceeds from the primary portion of the offering to purchase equity interests in LD Holdings Group LLC from certain unitholders. loanDepot will not receive any proceeds from the sale of Common Stock by the Selling Shareholders. loanDepot raised in total $53.9 million.

loanDepot is a leader in the online lending sector for mortgages that is currently booming. The S-1 filing indicated that loanDepot’s year over year originations have grown by 116% (for the nine months ended September 30, 2020). The lending has driven top-line revenue of $3.0 billion, or 227% year-over-year growth, and $1,465.9 million in net income.

Investors may have been cool on the IPO due to low-interest rates ignoring the fact that loanDepot makes a good amount of money in origination fees. Simultaneously, investors may be worried about a declining mortgage market as chatter regarding rising interest rates has picked up on the expectation of a COVID stimulus package that may be more than necessary.

Goldman Sachs & Co. LLC, BofA Securities, Credit Suisse and Morgan Stanley were lead book-running managers for the offering. Barclays, Citigroup, Jefferies and UBS Investment Bank were acting as book running managers, and JMP Securities, Nomura, Piper Sandler, Raymond James, William Blair and AmeriVet Securities were acting as co-managers for the offering.

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