LoanDepot Halts IPO at Brink of Pricing on 'Market Conditions'
LoanDepot, a fast-growing mortgage lender founded after the U.S. housing bubble burst, aborted a plan to sell as much as $540 million of stock to the public, hours before it was scheduled to set a price.
"LoanDepot is withdrawing due to market conditions," the company said in a statement after U.S. markets closed Thursday, without elaborating or specifying whether it may resume the initial public offering later. Its bankers had been preparing to price the transaction that night, according to data compiled by Bloomberg.
The venture, backed by private-equity investor Parthenon Capital Partners, filed on Oct. 8 to sell shares, then changed its chief financial officer less than three weeks later, an unusual move in the midst of a stock offering. A person familiar with the book-building said midday Thursday the sale price might fall below the company's target range of $16 to $18 a share.
Anthony Hsieh, a competitive sport fisherman and former president of LendingTree.com, built LoanDepot into one of the biggest nonbank U.S. mortgage lenders over the past six years. Earlier this year, it expanded into so-called marketplace lending, matching investors with borrowers seeking personal loans online. Total funding volume across its entire LoanDepot platform reached $14.3 billion in this year's first half, up from $5.4 billion a year earlier, the company said in August.
Jon Frojen, the CFO when the company started the IPO process, relinquished the post last month, according to a Nov. 3 regulatory filing. He went to work in the accounting and finance department, and was succeeded as CFO by Bryan Sullivan, a former portfolio manager at Pacific Investment Management Co. who once worked at Goldman Sachs Group Inc.
"The change in chief financial officer was a strategic decision of our management and our board of directors prior to our initial public offering and was not a result of any disagreements between management or our independent registered public accounting firm," the company wrote in its filing. A representative declined to comment further on Thursday and Frojen didn't immediately respond to a message seeking comment.
IPOs have had a rocky stretch after more than six years of a bull market in stocks. Last month, payments processor First Data Corp. priced its offering below a targeted range, while Albertsons Cos. delayed its own share sale after disappointing forecasts from Wal-Mart Stores Inc., a rival in the grocery business.
Hsieh, who cites his love of the ocean, boating and sport fishing on the company's website, also runs Team Bad Company, a seven-member competitive fishing team, according to LoanDepot's website. The team uses a 101-foot sport-fishing yacht to catch blue and black marlin, some more than 900 pounds, and has won more than $6 million in prizes.
Banks working on the IPO included Morgan Stanley, Goldman Sachs Group Inc., UBS Group AG, Wells Fargo & Co. and Barclays Plc. The company said in regulatory filings that Parthenon and Hsieh would receive some of the proceeds. Still, much would go back into the company, which aims to become "America's consumer lending platform."
While the venture could use that money for growth, it isn't in need of more capital for home lending because it typically sells the mortgages it creates, said Guy Cecala, publisher of the newsletter Inside Mortgage Finance.
"LoanDepot is an example of what a lot of nonbank mortgage lenders aspire to," Cecala said. "They're in it as much as they can be for some sort of payday for the principals over a relatively short period of time."