Billionaire LoanDepot Founder Cashes In on Housing Boom
(Bloomberg) -- LoanDepot Inc. logged its best year ever in 2020, as record-low rates turned mortgage lending into one of the few bright spots of the pandemic economy. Billionaire founder Anthony Hsieh and his private-equity partners are ready to cash in.
The 11-year-old company, which went public earlier this year, sold new junk-rated bonds on Tuesday to refinance debt and to pay its shareholders a $200 million special dividend, according to a copy of the debt documents reviewed by Bloomberg.
The deal adds Taiwanese-born Hsieh and private equity firm Parthenon Capital, which also owns a stake in the company, to a growing list of beneficiaries of a housing boom fueled by the Federal Reserve’s decision to slash rates to near zero in response to the pandemic.
LoanDepot is profiting twice from the ultra-low rates. Like other mortgage lenders, it has enjoyed an increase in lending as Americans sought to move away from cities or to refinance their mortgages at cheaper rates. It is also taking advantage of a rally in credit markets that slashed borrowing costs for companies that are rated below investment grade.
“They had a fantastic year,” said Bill Zox, a portfolio manager at Diamond Hill Capital Management, who said the company can afford to take on more debt given its strong performance. “They are growing very rapidly and they have one of the best direct-to-consumer franchises in the whole business.”
LoanDepot more than doubled its loan originations in 2020 to over $100 billion. Its revenue grew by over 200% to $4.3 billion over the same period, according to the debt documents.
The company priced the new seven-year bonds at a yield of 6.125%, according to people with knowledge of the offering. It raised a total of $600 million from the bond sale, or $100 million more than originally expected. It will use the rest of the proceeds to refinance existing debt and for general corporate purposes, according to a statement.
A representative for LoanDepot declined to comment beyond the statement, while Parthenon Capital did not respond to a request for comment. A spokeswoman for Credit Suisse Group AG, the lead arranger on the bond sale, also declined to comment.
Hsieh is the latest housing market entrepreneur to experience a boost in fortunes during the pandemic. Mat Ishbia, the chief executive officer of United Wholesale Mortgage, became a billionaire last year after the lending firm founded by his father went public. Rocket Cos. chief executive Dan Gilbert also saw his wealth soar after his company went public at a valuation of around $40 billion in August.
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