Quicken Loans raised $1.25 billion last week with a bond issuance, according to a report from Bloomberg.
Per the Bloomberg report, the vast majority of the money will go to Rock Holdings, Quicken’s parent company, and Dan Gilbert, the founder and chairman of Quicken and majority owner of Rock Holdings.
From the Bloomberg report:
Gilbert’s closely held Quicken Loans Inc. raised $1.25 billion on Friday in its first-ever bond issue, all but $250 million of which will flow to the parent company he controls, Rock Holdings. While junk-bond investors typically have extracted a premium from companies that borrow to pay their owners, buyers snapped up Quicken’s 5.75%, 10-year securities at a yield that’s in line with the average for the entire market, according to data compiled by Bloomberg.
The billionaire is tapping into demand for high-yielding assets that have become increasingly sparse as central banks worldwide seek to spur growth by suppressing interest rates. Buyers are demonstrating faith that Gilbert, who owns 77% of Rock Holdings, will use the proceeds wisely. Gilbert’s business ventures range from casinos to Detroit real estate.
Investors aren’t the only ones interested in Quicken Loans and its operations. Recently, the United States government sued Quicken Loans, accusing the lender of improperly originating and underwriting loans that were insured by the Federal Housing Administration.
According to an announcement from the Department of Justice, the government alleges that from September 2007 through December 2011, Quicken “knowingly submitted, or caused the submission of, claims for hundreds of improperly underwritten FHA-insured loans.”
The government’s lawsuit came days after Quicken sued the DOJ and the Department of Housing and Urban Development, saying that it was left with no alternative but to take this action after the DOJ demanded Quicken Loans make public admissions that were blatantly false, as well as pay an inexplicable penalty or face legal action.
