Pontiac-based mortgage company United Shore Financial Services is planning to go public on the Nasdaq stock exchange through a complex deal involving a company belonging to the brother of Detroit Pistons owner Tom Gores, the company announced Wednesday.
The deal calls for United Shore, which is also known as United Wholesale Mortgage, to merge with a so-called “blank-check company” affiliated with the Los Angeles-based Gores Group, founded in 1987 by Alec Gores.
Blank-check companies are companies that raise money through public markets to buy or merge with other businesses. This blank-check company, Gores Holdings IV, went public in January on the Nasdaq in an initial public offering that raised $425 million.
The deal, first reported by the Wall Street Journal, values United Shore at $16.1 billion, or 9½-times its estimated adjusted net revenue of $1.7 billion in 2021, and would make the Pontiac firm a publicly traded company. The deal would provide United Shore with up to $925 million, the Journal reported, and United Shore intends to use the money to grow its business.
The deal is expected to happen in the fourth quarter and, once done, Gores Holdings IV would change its name to UWM Corp. and the mortgage company’s stock ticker would be “UWMC.”
The deal also would leave United Shores’ owners — presumably the family of CEO Mat Ishbia and his father Jeffrey Ishbia — with a 94% stake in the new company.
Mat Ishbia was not available for an interview Wednesday, but might speak later Wednesday morning in a conference call with Wall Street analysts.
In a statement issued Wednesday by United Shore, Ishbia said: “Today, we took the very exciting first step toward becoming a public company. This gives us the opportunity to accelerate our plan to grow the independent mortgage broker channel and be able to help level the playing field for mortgage brokers as we continue to be laser focused on what is best for borrowers across America.
“We are thrilled to take this step without compromising the family control and unique culture we’ve built over the last 34 years. Upon completion of the transaction later this year, Mat Ishbia and the Ishbia family will retain 94% ownership and total control of the company and all decision making.”
Alec Gores, chairman and CEO of The Gores Group, said in a statement that he looks forward to working together with Mat Ishbia and his team “to accelerate the next phase of growth and to drive value for all of our stakeholders.”
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United Shore would be the second metro-Detroit-based mortgage company to go public this year.
Last month, Quicken Loans’ parent company Rocket Companies raised about $1.8 billion in its much-anticipated IPO on the New York Stock Exchange. Rocket Companies is composed of Quicken and several other Dan Gilbert financial businesses, including title company Amrock and home search platform Rocket Homes.
Fast-growing United Shore employs nearly 7,000 people and is ranked by industry publications as the No. 1 wholesale mortgage lender in the country.
Wholesale lending is the business of borrowing money to underwrite loans made by independent mortgage brokers. That is the only type of lending business United Shore does, and the company sells nearly all of its mortgages to government-backed enterprises such as Fannie Mae and Freddie Mac.
By comparison, Quicken Loans, which does more overall business than United Shore, specializes in direct-to-consumer mortgage lending and has a growing wholesale operation that is smaller than United Shore’s.
United Shore was started by Jeffrey Ishbia in the mid-1980sas a traditional mortgage lender, and went by the name Shore Mortgage.
Son Mat Ishbia, 40, took over as CEO in 2013 as the company was entering a hyper-growth phase after decisions by large…
Read More: Pontiac-based United Shore to merge, go public on Nasdaq