Compass, which is one of the top residential brokerages in the U.S., is preparing to go public with an IPO. On Jan. 11, it filed an S-1 document with the SEC. The document doesn't detail the share price or amount of money Compass intends to raise with the IPO, according to HousingWire.
Goldman Sachs and Morgan Stanley are underwriters of the IPO. Compass has also raised $1.5 billion from other investors including SoftBank, Fidelity, Wellington Management, Dragoneer, and Canadian Pension Plan Investment Board.
When will Compass IPO?
Compass was founded in 2012 by CEO Robert Reffkin and Executive Chair Ori Allon. Some critics have claimed that the company used overly “agressive” recruiting tactics. The company has spent money to acquire smaller brokerages and agents.
There are questions about whether Compass's model is sustainable. The company laid off 15 percent of non-agent staff during the COVID-19 pandemic. Compass grew to employ over 18,000 agents and enjoy record home sales in summer and fall of 2020.
Compass claims to be the first “modern” real estate platform of its kind “pairing the industry’s top talent with technology to make the search and sell experience intelligent and seamless.” In addition to its brokerage service, Compass has a concierge service, a title-and-escrow arm, and facilitates bridge loans.
Compass real estate IPO
A precise date for the real estate IPO to go forward hasn't been announced yet, but the IPO will likely occur in 2021. Reffkin sent a memo to agents about how the IPO would serve the company and its agents, as reported by The Real Deal. “Being public will allow Compass to raise capital that we can invest in more tools and more support to help you.”
According to Reffkin, the IPO is intended to benefit Compass in four primary areas — brand recognition, public trust, increased technology, and more employees.
Compass's valuation before its IPO
In July 2019, Compass's valuation was at $6.4 billion. At that time, the company raised $370 million in a Series G, according to The Real Deal.
The company finished out 2019 as the third-largest residential firm in the nation with $91.3 billion in sales. Coming in ahead of Compass were Realogy at $176.3 billion in sales and Berkshire Hathaway Homeservices of America at $135.9 billion in sales, according to HousingWire.
Compass real estate IPO pre-IPO shares
Usually, a company's pre-IPO shares are hard to come by unless you’re an institutional investor or an accredited investor. Now, individual investors can sometimes invest in companies before their IPO by using a platform like SharesPost or EquityZen.
Consulting with a banker or stockbroker can be helpful for an individual investor who wants to purchase pre-IPO shares of a company, like Compass, before it goes public.
After the Compass real estate IPO is official, investors will be able to purchase shares of the company like they do any stock investments. SoFi Invest's stock-trading portion of its business is new, but it's one way that individuals can buy and sell stocks.