Parent Of Figure Lending Files For IPO
Figure Lending now operating under the new umbrella brand, Figure Technology Solutions (FTS).
In a press release, Figure Technology Solutions, the parent company of fintech home equity lender Figure Lending, announced today it has filed for an initial public offering (IPO), confidentially submitting "a draft registration statement on Form S-1 with the SEC."
The Form S-1 is a registration statement that the Securities and Exchange Commission (SEC) requires U.S. issuers to file in order to publicly offer new securities.
Bloomberg reported in November that Figure was considering taking its lending arm public, possibly in the first half of 2024, with a rumored valuation of $2 billion to $3 billion.
On March 18, the company's leadership announced that Figure Lending would now be operating under the new umbrella brand, Figure Technology Solutions (FTS), described as a “developer and distributor of proprietary lending technology.” Mike Cagney, co-founder and CEO of Figure Technology Solutions, said of the change, “FTS looks forward to delivering technology to its partners, increasing access for borrowers, liquidity for originators, and a more active secondary market for investors across the broader landscape of consumer loans.”
Alongside other non-bank lenders like Spring EQ and Achieve Home Loans, Figure has revitalized a nascent home equity lending market that largely disappeared in the aftermath of the Great Financial Crisis. Founded in 2018, Figure uses a combination of automated underwriting and blockchain technology to close HELOCs in fewer than five days.
According to the latest CoreLogic Home Equity Insights report, U.S. homeowners collectively gained $1.3 trillion in home equity from the fourth quarter of 2022 to the fourth quarter of 2023 – an 8.6% annual increase – with the average U.S. homeowner gaining approximately $24,000.
In an interview with NMP last year, TJ Milani, chief operating officer of Figure Technology Solutions, said of home equity, “It's such a big market and we've barely cracked the surface of what we're doing. I think there's just a ton of room to grow." He also remarked on the technological innovations transforming the way that originators and borrowers think about home equity loans. "I think, in general, the next 3, 4, 5 years are going to be super, super valuable for this market.”
Concurrently, non-bank home equity lenders are actively rebuilding the secondary market for home equity securitizations by educating rating agencies and investors. Figure closed four rated transactions during 2023, the last in December backed by over 2,600 fixed-rate open HELOCs, with an aggregate principal balance of over $195 million.
The deal, which was significantly oversubscribed, included 20 unique class A-D investors, 15 of whom were new to the Figure shelf. Class A was 5.25x oversubscribed; Class B was 2.95x oversubscribed; Class C was 4x oversubscribed; and Class D was 4.25x oversubscribed.