Stonegate snares less than expected in IPO

Stonegate Mortgage Corp. sold 7.1 million shares during its initial public stock offering Thursday morning, but the $114 million raised was far less than the Indianapolis firm anticipated.

The $16 offering price was well below the $20-to-$22 range estimated in Stonegate’s initial IPO filing. Under that scenario, it could have raised up to $156 million.

Shares rose $2.25, or 14 percent, to close at $18.25 Thursday after rising as high as $18.68 share during the day.

Stonegate founder and CEO Jim Cutillo said Thursday he was nevertheless pleased with the interest in the fast-growing company. “We see tremendous opportunity going forward with the housing recovery," he said.

Cutillo is scheduled to ring the opening bell at the New York Stock Exchange on Friday.

Stonegate is one of the nation’s fastest-growing non-bank mortgage originators, with loan volume soaring 298 percent in the first six months of this year, versus the same period in 2012. This year, it topped IBJ's list of the fast-growing private firms in Indiana, with 515-percent revenue growth from 2010 to 2012.

In May, Stonegate completed a private offering through Long Ridge Equity Partners that generated $115 million, based on an offering price of $18 per share.

In addition to the 7.1 million shares sold by the company in Thursday's IPO, existing investors planned to sell 1.5 million shares, collectively raising as much as $33 million. Long Ridge, the biggest seller, plans to cash in at least 1.3 million shares.

Stonegate originates, finances and services mortgage loans—a combination it says helps hedge against housing cycles and interest-rate swings.

Based near Interstate 465 and Keystone Avenue, Stonegate has 650 employees, including about 400 locally. It has nearly 30 offices around the country.

Stonegate is the first company in Indianapolis to go public since ExactTarget in 2012. It aims to entice investors with a nationwide expansion, a diversified income stream, and the prospect that federal reforms will benefit such loan aggregators.

The company has been profitable every year since 2008, and last year earned $17 million on revenue of $95.5 million, according to filings with the Securities and Exchange Commission. Analysts say Stonegate will draw notice from potential investors, thanks to housing market improvements since the Great Recession.