E-Loan IPO Soars, Leading the Field
E-Loan Inc., the No. 1 Internet mortgage broker and lender, more than doubled Tuesday after its initial public offering, as investors expect more home buyers to shop online for a loan.
The Dublin, Calif.-based company’s shares, trading with the symbol EELN, rose $23 to $37 as 14.8 million shares changed hands on Nasdaq. The company sold 3.5 million shares, a 9% stake, and ended the day with a market value of $1.41 billion.
E-Loan, which began lending a year ago, made or arranged $490 million in loans in the first quarter of this year. Two of its main rivals, Mortgage.com and QuickenMortgage, made $300 million and $400 million in loans in the same period, respectively. Mortgage.com is preparing an IPO that could raise $112 million; QuickenMortgage is owned by Intuit Inc.
“There’s value in helping customers find mortgages,” said Kenneth Posner, an analyst at Morgan Stanley Dean Witter & Co. “Many mortgage lenders have been slow to get up on the Internet.”
Still, Posner cautions about getting too excited.
“I’m cautious about putting an Internet valuation on some of these companies,” he said. Internet mortgage companies “are production shops solely and are heavily dependent on refinancings. They face the challenge of adopting to lower volumes when rates rise.”
The news was less spectacular for other IPOs:
* Saticoy-based seed company Seminis (ticker: SMNS) priced 13.8 million shares at $15--below its expected range of $17 to $22--in a deal led by underwriter Goldman Sachs.
* Digital Island Inc. (ISLD) whose network services help companies that rely on the Internet but are constrained by its unreliability and slowness for commercial use, gained $1.88 to $11.88 after it priced the deal at $10 a share, the bottom of its expected price range. The San Francisco-based company raised $60 million through the offering.
* San Diego-based Women First Healthcare Inc. (WFHC) rose 56 cents to $11.56. The company, which sells pharmaceutical products that target women aged 35 to 69, raised $49.5 million through the IPO. The deal priced in the middle of its expected range. The company also offers an online forum and sells self-care products over the Internet.
* NFront Inc. (NFNT), which provides software that enables banks to offer services over the Internet, rose $3.50, to $13.50. The Norcross, Ga.-based company raised $39 million after pricing in the middle of its expected range.