Guild's IPO downsized, prices under expected range

Guild Holdings' downsized initial offering will bring in $64 million less than expected if all the shares, including the underwriters' option, are sold.

The deal priced at $15 per share for 6.5 million shares, plus an underwriters' option of an additional 975,000 shares. If the option is exercised, the proceeds will total $112.1 million. But only the selling shareholders will receive the proceeds, not the company.

Guild started trading just before 10 a.m. th is morning and quickly fell as low as $13.69 per share before rebounding and reaching $15.31 per share by 10:25 a.m., according to Yahoo Finance. But for most of the morning it has been trading below the offering price.

However, the proceeds were down from the expected $176 million that was derived using the midpoint of the initial range of $17 to $19 per share for 8.5 million shares along with a 1.275 million share underwriters' option.

Guild did not comment on why the offering size was reduced.

However, when Rocket Cos. did its IPO, it also downsized from the proposed size and price to 100 million shares at $18 per share from 150 million shares priced between $20 and $22 per share.

Even though Rocket's shares initially fell to $17.50 after trading started on Aug. 6, the price quickly turned around. Its low point since then was $18.31 on Aug. 13 and it reached a high of $34.42 on Sept. 2. On Oct. 21, Rocket closed at $20.01.

None of the other nonbanks that recently announced they were going public, either through an IPO or a special-purpose acquisition company merger, have started trading yet.

The selling shareholders, according to Guild's prospectus, includes several members of its management team and directors. McCarthy Partners is the sole holder of a separate class of common stock that after the IPO leaves it with 95% of the voting power on company matters.

Guild did remove one of the regulatory overhangs on the company by resolving its False Claims Act matter with the Department of Justice and the Department of Housing and Urban Development.

Guild settled the case on Oct. 20, without admitting liability or guilt for $24.9 million, of which $4.98 million will be paid to a whistleblower, Kevin Dougherty, its former head of quality control, who initiated the action under the qui tam provision in the act. The allegations involved loans submitted for Federal Housing Adminstration insurance between the start of 2007 and the end of 2011. The company said it entered into the agreement to avoid the delay, uncertainty and expense associated with continued litigation.

"Guild remains confident in the compliance processes it has in place for FHA-related mortgage lending and other mortgage lending activities and maintains its position that the claims asserted were without merit," CEO Mary Ann McGarry said in a statement. "With this matter now behind us, Guild looks forward to continuing to help its clients achieve their dreams of home ownership."