United Wholesale Mortgage made its public trading debut on Friday, the largest list ever recorded by a special purpose procurement company.
Shareholders of Gores Holdings IV Inc. approved this week a merger with the company, now called UWM Holdings Corp., in a deal to make it public at a valuation of nearly $ 16 billion. It marks a record for SPAC transactions, which have become a rage on Wall Street, according to data provider SPACInsider.
The Michigan mortgage company, traded on the New York Stock Exchange under the symbol UWMC, closed on Friday at $ 11.35, just below the closing price of Gores Holdings, of $ 11.54, on Thursday.
SPACs, also known as blank check companies, have the opposite effect to the conventional model of public offering, because they raise money before developing a business. I use the funds to make a purchase that turns the target into a public company. Once the empty check company merges with a target company, as Gores Holdings and UWM did on Thursday, the company receives SPAC’s place on a stock exchange, allowing it to sell shares to the public.
UWM works with independent brokers across the country to underwrite and service mortgages. It is one of the non-banking mortgage companies that is embracing the public markets at a time of booming US real estate market. Low interest rates helped push mortgage origins to record levels in 2020. UWM was the third largest mortgage lender in the United States in the first three quarters of 2020, according to industry research group Inside Mortgage Finance.